A fixed income analyst is least likely to conduct an independent analysis of credit risk because credit rating agencies:
A) may at times mis-rate issues.
B) often lag the market in pricing credit risk.
C) cannot foresee future debt-financed acquisitions.

Question

Quizplus · Accepted Answer

Credit rating agencies may at times mis-rate issues and often lag the market in pricing credit risk, but these are reasons why an analyst would conduct an independent analysis. The inability to foresee future debt-financed acquisitions is not a reason to avoid independent analysis; it's a limitation that affects both analysts and credit rating agencies alike.

A Fixed Income Analyst Is Least Likely to Conduct an Independent