What Is a Credit Rating?
Creditworthiness means how well a borrower can be trusted to repay.
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1.What does a credit rating measure?
Creditworthiness means how well a borrower can be trusted to repay.
2.Where is the investment grade line?
BB plus and below is called high yield or speculative; remember it as low grade, high rate.
3.Borrower A has a 2 percent default chance and B a 10 percent chance. Which gets the lower rating?
A higher chance of default means a lower grade.
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Sources (7)
- 15 U.S.C. 78c(a)(60), Securities Exchange Act, Definition 'credit rating', Legal Information Institute
- FINRA, Treasury Securities Data Glossary (Definition Investment Grade
- US SEC, Summary Report of Issues Identified in the Commission Staff's Examinations of Select Credit Rating Agencies (8.7.2008)
- Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report (January 2011), Conclusions
- Federal Reserve Board, Monetary Policy Report of February 2012 (2011 Annual Report), Abschnitt
- Federal Reserve Bank of St. Louis, The Regional Economist, October 2011, Ask an Economist
- Eigene Berechnung (erwarteter Verlust
Education only. Not financial advice.