Which of the following statements about bond rating agencies is true?
A) Bonds are rated by an agency of the federal government.
B) Bonds rated AAA are guaranteed by the company that issues the rating.
C) During the financial crisis of 2007-2009 it became clear that rating agencies severely underestimated the risks of some issues.
D) Bond rating agencies are paid by investors and receive no compensation from the bonds' issuer.

Question

Quizplus · Accepted Answer

Bond rating agencies, during the financial crisis of 2007-2009, were criticized for underestimating the risks associated with mortgage-backed securities and other complex financial products, contributing to the severity of the crisis.

Which of the Following Statements About Bond Rating Agencies Is