Word count: 3000
Answer EITHER (A) OR (B):
(A) Critically analyse the evidence from the research literature (academic journal articles) on the financial market impact of credit ratings actions.
Your answer must focus on at least two of the following: (i) equity markets; (ii) bond markets; (iii) credit derivatives; (iv) the foreign exchange market; (v) cross-country spillovers.
(B) Answer BOTH parts (i) and (ii).
(i) Critically analyse the evidence from the research literature on split credit ratings. Your answer should include a focus on how financial markets deal with split ratings. (50% weighting).
(ii) Critically analyse the evidence from the research literature on the relative timing of rating agencies’ actions i.e. the ratings lead-lag literature. (50% weighting).
Make sure to utilise the relevant journal articles cited in the seminar content.
At least 15 journal articles must be used to inform your discussion.
The format of your answer must include an introduction, a conclusion and references. The report will be judged on the following criteria: a) Argument, understanding and analysis (e.g. addressing the task with relevant knowledge, understanding and insight; coherent and structured progression of argument); b) Sources and evidence (e.g. breadth and depth of reading; insights and evidence from the literature; proper citation and referencing); and c) Written communication (e.g. organization and presentation).