Question

For investors, the ______ provide independent, easy-to-use measurements of relative credit risk.

Answer 1

For investors, credit rating agencies provide independent, easy-to-use measurements of relative credit risk.

A credit rating agency refers to a company that assigns credit ratings. A credit rating agency also serves as a basis for proper risk and return.

A credit rating agency is important as it helps in rating the ability of a debtor to pay back its credit. Therefore, for investors, credit rating agencies provide independent, easy-to-use measurements of relative credit risk.

In conclusion, credit rating agencies also rate the creditworthiness of issuers of debt instruments.

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