Question : Which of the following is a feature of a credit rating agency?
Option 1: Regulating the functioning of commercial banks
Option 2: Providing credit facilities
Option 3: Issuing credit ratings for debt securities
Option 4: None of the above
Correct Answer: Issuing credit ratings for debt securities
Solution : The correct answer is (c) Issuing credit ratings for debt securities
A credit rating agency is responsible for assessing the creditworthiness of borrowers or debt issuers and assigning credit ratings to debt securities. These ratings provide an opinion on the credit risk associated with a particular debt instrument, such as bonds or other forms of debt obligations. The ratings indicate the likelihood of timely repayment of principal and interest.
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