Which of the following statements is incorrect?
A) Credit ratings are performed by a large number of firms.
B) The default experience with bonds is consistent with ratings.
C) One problem with the current bond rating system is the way bond ratings firms are compensated.
D) The SEC requires Nationally Recognized Statistical Rating Organizations (NRSROs) to evaluate risk.
E) One problem with bond ratings is they tend to follow changes in a company's financial condition instead of predict the changes.

Question

Quizplus · Accepted Answer

Credit ratings are primarily performed by a few major firms, such as Moody's, Standard & Poor's, and Fitch, rather than a large number of firms.

Which of the Following Statements Is Incorrect