To establish the credit ratings that are used in the financial industry to represent the level of default risk associated with a bond, what do credit rating agencies do?

Question

Quizplus · Accepted Answer

Credit rating agencies independently assess the default risk associated with bonds by analyzing multiple sources and institutions, such as financial statements and economic trends. They do not collaborate with governmental taxation and finance departments, provincial securities departments, national stock exchanges, or international organizations like the World Bank and International Monetary Fund.

To Establish the Credit Ratings That Are Used in the Financial