Rating


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Related to Rating: credit rating

Rating

1. See: Bond rating.

2. See: Credit score.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

rating

The grading of a security with respect to a characteristic or a set of characteristics such as safety and growth. Rating is most often applied to debt securities, which are graded according to the issuer's ability to pay interest and principal when due. See also bond rating, downgrading, Moody's Investment Grade, not rated, stock rating, upgrading.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Rating.

Rating means evaluating a company, security, or investment product to determine how well it meets a specific set of objective criteria.

For example, a bond issue may be rated along a spectrum from highest quality investment grade to speculative, or from AAA to D.

Rating typically affects the interest rate a fixed-income security must pay to attract investors, forcing lower-rated bond issuers to pay higher rates. Other investors may shun low-rated investments entirely, unwilling to take the risk that the issuer might default. However, ratings are not infallible, even in industries, such as insurance, that are regularly scrutinized.

Rating differs from ranking, which assigns the relative standing of two or more similar items in relation to each other.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Previously rated Baa1.ru, Ratings under Review for Downgrade
Loan agreements now often require borrowers to maintain certain ratings from NRSROs; failure to do so can trigger higher interest rates, or even default.
An exception is McKeachie (1997) who reported that student ratings in first- and second-year courses may have lower validity than student ratings in more advanced courses (in which students have broader experience as a basis for their ratings).
The four factors are ranked in order of importance, and two or more factors may have equal ratings. For instance, we may rank in descending order of importance: mission capability, past performance, cost/price, and risk.
Experience rating is clearly a gamble, especially for small group employers.
These NRSROs have assured policymakers that they have erected adequate firewalls between their rating service and advisory service operations.
It is necessary to move beyond shotgun approaches to correcting rating error and mobilize verification databases and pattern detection technology to target likely errors.
The claim is guaranteed by a qualifying securities firm's parent company with such a rating.
It is essential to know not just a company's letter rating, but also the service that provided the rating.
Inc., Dominion Bond Rating Service Limited, Fitch Inc., Moody's Investors Service Inc., and the Standard & Poor's Division of the McGraw Hill Cos.