Security Analysis and Portfolio Management

Security Analysis and Portfolio Management Assignment example
Undergraduate
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Finance & Accounting
Pages 15 (3765 words)
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Security Analysis and Portfolio Management Name of the Student University Table of Contents What do you mean by credit Rating? 3 Objectives and Benefits of Credit Rating 5 Major Credit Rating Agencies in the World 8 Moody’s 8 Standard & Poor’s 9 Fitch 10 Rating Symbols of various agencies for bonds and stocks 10 Fitch Group 11 Moody’s 12 Standard & Poor’s 13 Methodology used in assessing the credit rating 14 CAMEL Rating 16 Issues Related to Credit Rating 18 References 20 Bibliography 22 What do you mean by credit Rating?…

Introduction

It was originated in USA and the first credit rating agency was set up in New York. Credit rating can be defined as the way of evaluating the credit worth of a debtor. According to Moody’s a rating is an opinion on the future ability and legal obligation of the issuer to make timely payments of principal and interest on a specific fixed income security (Gurusamy, 2009, p.88-89). In general, the evaluation of the various securities is done by the credit rating agencies regarding the ability of the debtor to pay back the financial obligations and the probability of becoming a defaulter. In addition, credit rating is also used by the individuals and business ventures that purchase bonds which are issued by the government and companies in order to determine the possibility that company or the government will fulfill its bond obligations. The credit rating is based on the records of earlier repayment and borrowing. Apart from that, the credit rating is also done on the basis of the company’s availability of assets and liabilities. ...
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