CREDIT RATING * A credit rating evaluates the credit worthiness of a debtor‚ especially a business (company) or a government. It is an evaluation made by a credit rating agency of the debtor’s ability to pay back the debt and the likelihood of default.[3] * Credit ratings are determined by credit ratings agencies. The credit rating represents the credit rating agency’s evaluation of qualitative and quantitative information for a company or government; including non-public information obtained
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Credit Rating Agencies Credit rating agencies play a crucial role in the financial system‚ and played an important one in the events that led to its near-collapse in 2008. The business is dominated by three firms – Moody’s‚ Standard and Poor’s and Fitch Ratings -- whose job is to provide an objective analysis of the risk posed to investors by bonds‚ companies and countries. During the housing boom‚ the system broke down‚ as several billion dollars worth assets‚ later shown to be worthless‚ received
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The Causes of Subprime Mortgage Financial Crisis By Jessica Tian Abstract The U.S. subprime mortgage crisis was a set of events that led to the 2008 financial crisis‚ characterized by a rise in subprime mortgage defaults and foreclosures. This paper seeks to explain the causes of the U.S. subprime mortgage crisis and how this has led to a generalized credit crisis in other financial sectors that ultimately affects the real economy. In recent decades‚ financial industry has developed quickly
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Fundamental and Technical Analysis of Banks: A Study Conducted on Public & Private Sector Banks of India. 1. Introduction: The Indian Banking sector well shielded by the Central bank of the country has managed to sail through most of the crisis. But‚ currently in light of slowing domestic GDP growth‚ persistent inflation‚ asset quality concerns and elevated interest rates‚ the investment cycle has been wavering in the country. The major reasons for conducting the study on banking sector
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Deregulation Created the Subprime Mortgage Crisis The mid-1990s saw an economic revival. What incited this activity was a technology boom like no other. It created a new era of electronics and computing. There were cell phones‚ desktop and laptop computers‚ the Internet‚ electronic games‚ flat panel TVs and major advances in business software and efficiencies. The housing industry was a big benefactor of this new economy. Home prices began to rise again by 1996. The rate of home ownership during
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for the study: The prediction of credit ratings is of interest to many market participants. Portfolio risk managers often need to predict credit ratings for unrated issuers. Issuers may seek a preliminary estimate of what their rating might be prior to entering the capital markets. For that matter‚ the rating agencies themselves may seek objective benchmarks as an initial input in the rating process. Understanding the increasingly important role of ratings‚ especially in the light of Basel II
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Subprime Mortgage Crisis The subprime mortgage crisis is foreclosures of the U.S housing market which began in late 2006 until present day. Prior to 2006‚ the housing market seemed to be going up for long time. Noticing this trend‚ borrowers think that everything was fine and refinancing will solve any future problems. In 2006-2007‚ the housing market moderately cooled down. Many unable to refinance because of higher interest rate of Adjustable Rate Mortgages (ARM)‚ found themselves in a deep
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In year 2007‚ United States witnessed the Subprime Mortgage Crisis‚ which was known as the “Mortgage meltdown”. It triggered a national financial crisis‚ which led to a tremendous decline is the housing market‚ rise in foreclosures and the collapse of some leading banks. This essay will look into the various causes of the subprime crisis as well as the parties who are responsible for this economic tragedy. Years prior to the crisis‚ United States had large inflow of foreign funds. In 2001 to 2003
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recent subprime mortgage crisis? What could they have done differently? An independent auditor has a duty is to: identify‚ measure‚ and communicate financial information about an entity for decision making purposes. They are also responsible for generating the financial statements/reports for an organization. (Marshall‚ McManus‚ Viele‚ 2008) The subprime mortgage crisis is the result of contract laws allowing lenders the securitization of subprime mortgage loans. Other causes of the subprime mortgage
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1. Introduction The US Subprime Mortgage Crisis in 2007 has had a severe impact on the global financial system. The collapses of Bear Stearns and Lehman Brothers‚ the acquisition of Merrill Lynch by the Bank of America and the conversion of Morgan Stanley and Goldman Sachs into bank-holding companies have all resulted from this subprime crisis that shocked the world and directly triggered the greatest global financial crisis since the Great Depression. The underlying factors leading to the crisis
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