M-REITs, or mortgage REITs, primarily invest in real estate loans and mortgage-backedsecurities that are often below investment grade. When a mortgage REIT decided someyears ago to re-securitize a substantial portion of its CMBS "BB" and "B" securities, itreceived surprisingly high investment grade ratings of "A" and "BBB" from Standard &Poor's on the new securities that were created from the cash flows of the underlyingportfolio of non-investment grade rated securities. But when the financial markets beganto fall a few months later, that mortgage REIT quickly went bankrupt and the value of its"A" and "BBB" investment grade rated re-securities fell substantially. The intendedpurpose of the ratings agencies is:To produce substantial profits for the rating agencies from the fees paid to them for givinghigher ratings on investments than might otherwise be appropriateTo help businesses and governments raise needed capital by providing them with the ratingsthey need to successfully sell their equity and debt securitiesTo give investors an objective assessment of the level of risk of the rated securitiesTo ensure that the public does not lose money on their rated investments

To give investors an objective assessment of the level of risk of the rated securities…

Answered: M-REITs, or mortgage REITs, primarily…

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