Question : The function of credit rating agencies is to:
Option 1: Regulate stockbrokers
Option 2: Issue government bonds
Option 3: Provide investment advice to investors
Option 4: Assess the creditworthiness of issuers
Correct Answer: Assess the creditworthiness of issuers
Solution : The correct answer is (d) Assess the creditworthiness of issuers.
The primary function of credit rating agencies is to assess the creditworthiness of issuers, such as companies or governments, and assign credit ratings to their debt instruments. Credit rating agencies analyze the financial condition, business operations, and other relevant factors of the issuer to determine the likelihood of timely repayment of the issuer's debt obligations.Based on their analysis, credit rating agencies assign credit ratings to the issuer's debt instruments, such as bonds or other types of securities. These credit ratings provide an assessment of the issuer's ability to meet its financial obligations and serve as an indicator of the risk associated with investing in those debt instruments.
Question : Statement 1: Credit rating agencies assess the creditworthiness of issuers.
Statement 2: Credit rating agencies issue government bonds to the public.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
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