Corporate Governance and Credit Ratings Quiz

<p>Evaluating the quality of a company's disclosure standards and regulatory compliance. (D)</p> Signup and view all the answers

<p>A successful business needs a well-defined and comprehensive business plan. (B)</p> Signup and view all the answers

<p>Environmental risk (C)</p> Signup and view all the answers

<p>All of the above (D)</p> Signup and view all the answers

<p>To analyze the company's business risk and provide a rating based on their assessment. (D)</p> Signup and view all the answers

<p>The company's customer satisfaction ratings (B)</p> Signup and view all the answers

<p>To review the analysts' report and make the final rating decision. (A)</p> Signup and view all the answers

<p>To signal that the rating agency is closely monitoring the issuer's performance and may adjust the rating. (B)</p> Signup and view all the answers

<p>The issuer is informed of the rating decision and has an opportunity to provide feedback or appeal the decision. (D)</p> Signup and view all the answers

<p>The rating agency conducts an annual review with the issuer to update the provided information. (C)</p> Signup and view all the answers

<p>To evaluate the overall financial health of a company and its ability to repay its debts. (D)</p> Signup and view all the answers

<p>Small, privately-held businesses (A)</p> Signup and view all the answers

<p>Structured ratings (A)</p> Signup and view all the answers

<p>Negative reputational impact. (B)</p> Signup and view all the answers

<p>Market Risk (D)</p> Signup and view all the answers

<p>People and process (C)</p> Signup and view all the answers

<p>It can lead to currency fluctuations. (A)</p> Signup and view all the answers

<p>Improved competitive advantage (D)</p> Signup and view all the answers

<p>The damage to General Motors' image and trust (A)</p> Signup and view all the answers

<p>A way to ensure credit ratings reflect the likelihood of default. (B)</p> Signup and view all the answers

<p>It demonstrates a commitment to innovation and customer satisfaction (A)</p> Signup and view all the answers

<p>3.62% (D)</p> Signup and view all the answers

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<p>It can create uncertainty for investors as credit risk profiles change frequently. (D)</p> Signup and view all the answers

<p>It enables investors to hold their investments for longer periods with greater confidence. (C)</p> Signup and view all the answers

<p>Maximizing the profitability of their rating services. (B)</p> Signup and view all the answers

<p>Transition rate (D)</p> Signup and view all the answers

<p>Sensitivity (D)</p> Signup and view all the answers

<p>Customer (B)</p> Signup and view all the answers

<p>Safeguard against default (B)</p> Signup and view all the answers

<p>More competition (A)</p> Signup and view all the answers

<p>Non-rotation of credit rating agencies (A)</p> Signup and view all the answers

<p>The calculation of financial ratios (A)</p> Signup and view all the answers

<p>Evaluating the likelihood of a company's ability to achieve its strategic goals (A)</p> Signup and view all the answers

<p>Employee training and processes (B)</p> Signup and view all the answers

<p>Political Risk (C)</p> Signup and view all the answers

<p>It results from decisions affecting public perception. (B)</p> Signup and view all the answers

<p>Failure to meet contractual obligations (D)</p> Signup and view all the answers

<p>It can enhance customer and investor confidence. (A)</p> Signup and view all the answers

<p>Market Competition (A)</p> Signup and view all the answers

<p>Improved ratings from credit agencies (A)</p> Signup and view all the answers

<p>Through unexpected changes leading to country risk (D)</p> Signup and view all the answers

<p>Liquidity Risk (D)</p> Signup and view all the answers

<p>Assessing the creditworthiness of an issuer (B)</p> Signup and view all the answers

<p>Earnings quality (D)</p> Signup and view all the answers

<p>It highlighted limitations and potential conflicts of interest in credit rating agencies. (C)</p> Signup and view all the answers

<p>All of the above (D)</p> Signup and view all the answers

<p>Financial Risk Assessment (B)</p> Signup and view all the answers

<p>All of the above (D)</p> Signup and view all the answers

<p>Lack of transparency in rating processes (D)</p> Signup and view all the answers

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Risk arising from human error or process failure within a company.

Risk of damage to a company's reputation following strategic decisions.

Unexpected changes in financial conditions affecting a company.

Risk from non-fulfillment of obligations by a counter party.

Risk to overseas investors from governmental actions in host countries.

Risk of financial loss due to fluctuating interest rates.

Risk of loss due to fluctuating currency exchange rates.

Risk arising from inaccuracies in accounting practices and statements.

The past financial outcomes and results of a business.

A company's standing relative to its rivals in the industry.

An analysis of potential risks a business faces.

Group that evaluates credit ratings and makes decisions based on analysis.

The process of informing issuers about rating decisions and allowing disputes.

Ongoing observation of a company's performance post-rating.

A status indicating that a rating may change after ongoing scrutiny.

Scope of ratings that includes various industries and instruments.

An assessment of the creditworthiness of a borrower or entity.

Services provided by agencies to evaluate the credit risk of issuers.

Facilitates decision-making for investors and issuers regarding risk.

The steps involved in assessing and assigning credit ratings.

A framework used to analyze credit ratings of banks.

Organizations that assign credit ratings, evaluating the credit risk of entities.

The shortcomings of credit rating entities, which can lead to inaccurate ratings.

A financial crisis that arose from the collapse of the subprime mortgage market.

Ratings focusing on disclosure quality and regulatory compliance.

A comparative summary used by rating agencies indicating safety levels.

Highest safety rating for debentures indicating lowest credit risk.

Symbols like ‘+’ or ‘-’ added to ratings to show relative standing.

Possibility of lower profits or losses for a company.

Risk from inadequate business planning or strategy failures.

A relationship where one variable increases as the other decreases, specific to credit ratings and default probability.

The percentage of defaults that occur over a specific period for a given credit rating.

Ratings assigned by CRISIL to indicate the creditworthiness of issuers.

Indicators showing how often credit ratings change over time among rated firms, expressed as a percentage.

The importance of maintaining consistent ratings over the life of financial instruments to assure investor confidence.

Refers to the group who benefits the least from credit rating services.

Credit rating that continually adapts to changing circumstances.

A situation in which credit rating agencies might favor certain clients to avoid losing them.

Lower reliability of ratings due to insufficient evaluation methods.

Strategies to improve credit ratings including introducing more players.

The various evaluations and services offered by credit rating agencies.