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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A risk manager is in possession of credit ratings provided by two rating agencies, X and Y, for 30 companies the manager oversees. The ratings are classified into four categories:

  • Rating 1: High investment grade
  • Rating 2: Mid investment grade
  • Rating 3: Low investment grade
  • Rating 4: Non-investment grade

The manager plots the rating categories from the two agencies as shown below:

[Image blocked: Corporate Ratings: Agency X vs. Agency Y]

Which of the following statistical measures could best help the manager approximate the link between rating categories from the two agencies?

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