Answered: Why the existence of rating agencies…

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Why the existence of rating agencies has lowered returns on corporate bonds?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 18QTD

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How would a financial institution with a large bond portfolio be affected by falling interest rates? Would it be affected by a greater degree than a financial institution with a greater concentration of bonds (and fewer short-term securities)?
What types of advantages or expertise should an investment bank have to be competitive in the corporate bond market? What different types of advantages or expertise should it have to be competitive in the Treasury bond market? Why?
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