The National Credit Rating Agency downgraded the credit rating of Grand Limited by two levels from BB to B+. The credit rating agency was concerned about the company’s ability to refinance portions of its debt. Both B and B+ are considered “junk” bonds and are below the BBB−category, which is the lowest grade that many pension and mutual funds are allowed to hold. a)Discuss whether the credit rating agency is a stakeholder from Grand’s perspective. b)Discuss any bias that Grand might have when it issues its financial statements.
The National Credit Rating Agency downgraded the credit rating of Grand Limited by two levels from BB to B+. The credit rating agency was concerned about the company’s ability to refinance portions of its debt. Both B and B+ are considered “junk” bonds and are below the BBB−category, which is the lowest grade that many pension and mutual funds are allowed to hold. a)Discuss whether the credit rating agency is a stakeholder from Grand’s perspective. b)Discuss any bias that Grand might have when it issues its financial statements.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The National Credit Rating Agency downgraded the credit rating of Grand Limited by two levels from BB to B+. The credit rating agency was concerned about the company’s ability to refinance portions of its debt. Both B and B+ are considered “junk” bonds and are below the BBB−category, which is the lowest grade that many pension and mutual funds are allowed to hold. a)Discuss whether the credit rating agency is a stakeholder from Grand’s perspective. b)Discuss any bias that Grand might have when it issues its financial statements.
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