Fixed Income Q129

129Which of the following is least likely to be a limitation of a credit rating agency’s ratings?

A
Credit ratings are relatively stable over time even though the actual credit risk might have changed.
B
It is not easy to use credit ratings to compare bonds across different industries.
C
Credit ratings tend to lag market pricing of credit.

Option : B
Explanation : Options A and C are true statements and represent limitations of credit ratings. Option B does not represent a limitation. Credit ratings can be used to compare bonds across different industries.

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