When corporations issue bonds they usually retain a credit rating agency to rate the bonds. The higher the bond rating the
lower the interest rate the market demands to be paid on the bonds. The higher the bond rating the lower the risk associated
with the bond. The bond credit rating is an opinion issued. Investors rely upon the rating agencies opinion of risk. The rating
agencies are paid by the corporation requesting the credit rating.
Paper Requirements: Discuss the impact of the Financial Reform Act of 2010 on credit rating agencies. Are they more objective since the enactment of the Financial Reform Act of 2010? What does the act mandate?
One of the Required References (peer reviewed journals – no articles allowed)
Madura, J. (2018). Financial mark ets and institutions (13th ed.). Boston, MA: Cengage Learning.
ISBN: 978-0357130797 (hardcover)
