Financial Risk Manager Part 2

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Which of the following statements about agencies' ratings and internal credit rating systems is true?

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A

Internal credit rating systems used by banks primarily rely on market information to estimate probabilities of default and aim for quick responsiveness to changes.

B

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Rating agencies like Moody's and S&P frequently change credit ratings to ensure stability and avoid frequent fluctuations in the market.

C

Internal credit rating systems often focus on profitability ratios and balance sheet indicators to assess creditworthiness, recognizing the importance of cash flow in loan decisions.

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