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Which of the following objectives are targeted by rating agencies when assigning ratings:
1. Ratings accuracy
2. Ratings stability
3. High accuracy ratio (AR)
4. Ranked ratings
Suggested Answer: B
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The persistence parameter, , is the coefficient of the prior day's variance in EWMA calculations. A higher value of the persistence parameter tends to 'persist' the prior value of variance for longer. Consider an extreme example - if the persistence parameter is equal to 1, the variance under EWMA will never change in response to returns.
1 - is the coefficient of recent market returns. As is lowered, 1 - increases, giving a greater weight to recent market returns or shocks. Therefore, as is lowered, the model will react faster to market shocks and give higher weights to recent returns, and at the same time reduce the weight on prior variance which will tend to persist for a shorter period.
39 comments · newest first
HE
Heike
10 months ago
Ratings stability is crucial for investor confidence.
LE
Leonie
11 months ago
I’d go with D, all three matter!
OW
Owen
11 months ago
Wait, are they really that accurate though?
EL
Elli
11 months ago
I think 3 is super important too.
VE
Vernice
11 months ago
Definitely 1 and 2 are key!
BR
Brent
12 months ago
I definitely recall that ratings accuracy is a key objective, but I’m not sure if stability is enough on its own. I might go with option C, but I’m still debating.
CL
Clement
12 months ago
I’m a bit confused about the high accuracy ratio. I thought it was more about the overall reliability of the ratings. Maybe option A is correct?
EL
Elvis
12 months ago
I remember practicing a similar question where we discussed the importance of accuracy and stability. I feel like option D could be the right choice since it includes both.
JO
Jordan
1 year ago
I think ratings accuracy and stability are really important, so I’m leaning towards option C. But I’m not entirely sure about the accuracy ratio.
TW
Twila
1 year ago
I'm pretty confident that the right answer is C. Rating agencies focus on providing accurate and stable ratings, not necessarily the highest accuracy ratio or ranked ratings.
MA
Magda
1 year ago
I'm a bit confused on the difference between ratings accuracy and accuracy ratio. Can someone clarify that for me before I submit my answer?
TI
Tina
1 year ago
Hmm, I think the key here is to identify the main objectives that rating agencies have when assigning ratings. Let me re-read the options carefully.
KR
Krissy
1 year ago
This question seems straightforward, but I want to make sure I understand the concepts of ratings accuracy, stability, and accuracy ratio before I answer.
HO
Hortencia
1 year ago
Okay, I've got this. The correct answer is C - ratings accuracy and ratings stability are the main objectives for rating agencies, not high accuracy ratio or ranked ratings.
LA
Laticia
1 year ago
I'm a little unsure about the exact details here. I'll need to carefully read through the options and make sure I understand the relationship between the Service Desk and Problem Management.
AN
Antione
1 year ago
Hmm, I'm a bit unsure about some of these options. I'll need to refresh my memory on the key components of a state diagram before answering.
DO
Dorinda
1 year ago
I'm just going to close my eyes and point. Ratings, shmayings, as long as I pass this exam, I'm happy.
LO
Lorrie
1 year ago
User 3: I'm just going to go with option D, covering all the bases.
AM
Amber
1 year ago
User 2: I agree, those are important for passing the exam.
FR
Francoise
1 year ago
User 1: I think the objectives targeted by rating agencies are ratings accuracy and stability.
AL
Alison
1 year ago
Ah, the classic rating agency dilemma - accuracy vs. stability. It's like trying to keep a cat and a dog in the same room. Good luck with that one, folks.
CA
Carey
1 year ago
User 3: Definitely, accuracy and stability go hand in hand.
VI
Viki
1 year ago
User 2: I agree, it's important to have both in ratings.
TA
Tarra
1 year ago
User 1: I think the objectives targeted by rating agencies are accuracy and stability.
LA
Lawrence
1 year ago
Ranked ratings? What is this, a high school popularity contest? I'd rather have my ratings be accurate and stable, thank you very much.
ER
Erick
1 year ago
Virgilio: Ranked ratings seem unnecessary, I'd rather have reliable information.
VI
Virgilio
1 year ago
User 2: Definitely, those are the most important objectives for rating agencies.
FI
Filiberto
1 year ago
User 1: I agree, accuracy and stability are key when it comes to ratings.
JA
Jani
1 year ago
High accuracy ratio? That sounds like something straight out of a statistics textbook. I'll go with the simpler options - 1 and 2.
TH
Thaddeus
2 years ago
Ratings accuracy and stability seem like the obvious choices. I mean, who doesn't want their ratings to be, you know, accurate and stable?
AN
Antione
1 year ago
Oretha: Exactly, that's what I think too.
JU
Jutta
1 year ago
User 3: So, the answer would be option C) 1 and 2, right?
RO
Rosalyn
1 year ago
User 2: Yeah, I agree. Those are definitely important for any rating agency.
OR
Oretha
1 year ago
User 2: Yeah, I agree. Those are definitely important for any rating agency.
SA
Sabine
1 year ago
User 1: I think the objectives targeted by rating agencies are ratings accuracy and stability.
KA
Karon
1 year ago
User 1: I think the objectives targeted by rating agencies are ratings accuracy and stability.
EV
Eveline
2 years ago
I believe the correct answer is C) 1 and 2 because accuracy and stability are key objectives for rating agencies.
BU
Bulah
2 years ago
I agree with Bong. Ratings accuracy and stability are crucial for rating agencies.
BO
Bong
2 years ago
I think the objectives targeted by rating agencies are ratings accuracy and stability.