Homework Answers
The lower, the credit rating of the bond isssue, the higher its risk of default, and therefore, higher the borrowing firm's cost of debts.
Explanation:-
The credit rating acgencies cut the rating or give lower rating to the firms, which are highly risky in term of default. If any firm has no risk of default, then the credit rating of that firm gets higher.
Therefore, when the credit rating of any firm goes lower due to high risk of default, in such situation the firms finds it hard to issue debt or raise fund from the debt market because the invetors abstain, due to default risk and as a result it need to pay the high interest for issuing debt and the cost of debts get higher.
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as nationally recognized statistical rating organizations
(“NRSROs”) by the?U.S. Securities
and Exchange Commission:
• DBRS Limited (“DBRS”);
• Fitch, Inc. (“Fitch”);
• Moody’s Investors Service, Inc....
The chart depicts the credit rating of Russia over the
past two decades. Which of the following statements would best
accompany this graph?
As the risk that Russia would default increased around
1998, its credit rating decreased abruptly. Investors who were
holding bonds from the Russian government lost money because their
bonds had a higher yield than the new ones that Russian issued
after this abrupt drop in its credit rating.
As the risk that Russia would default increased around...
just question 35
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Please Help
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Could you please help me solve problem E7-33. Assessing the
Effects of Bond Credit Rating Changes
Ford Motor Co. reports the following information from the Risk
Factors and the Management Discussion
and Analysis sections of its 2015 10-K report.
Credit Ratings Our short-term and long-term debt is rated by
four credit rating agencies designated
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(“NRSROs”) by the?U.S. Securities
and Exchange Commission:
• DBRS Limited (“DBRS”);
• Fitch, Inc. (“Fitch”);
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