Why is there a need for companies like Standard and Poor’s and Moody’s to provide ratings (i.e. AAA, AA, B, etc.) on mortgage-backed securities? What problem do the ratings help solve? Group of answer choices -moral hazard -correlated risks -bank runs -adverse selection

Why is there a need for companies like Standard and Poor’s and Moody’s to provide ratings (i.e. AAA, AA, B, etc.) on mortgage-backed securities? What problem do the ratings help solve? Group of answer choices -moral hazard -correlated risks -bank runs -adverse selection

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter31: Capital Markets

Section: Chapter Questions

Problem 8E

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Question

Why is there a need for companies like Standard and Poor’s and Moody’s to provide ratings (i.e. AAA, AA, B, etc.) on mortgage-backed securities? What problem do the ratings help solve?

Group of answer choices

-moral hazard

-correlated risks

-bank runs

-adverse selection

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