A Finance Professor's blog. I am a Professor of Finance in the Poole College of Management at NC State University. My website: https://sites.google.com/ncsu.edu/warr Opinions are my own.
Tuesday, November 22, 2011
Ratings changes lag the market.
An important aspect of bond ratings is that when they are changed they usually lag the market. In other words, investors usually price the declining credit quality of the bond into yields before the ratings agencies get around to issuing a new rating. Case in point: France.
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