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    What are the main criticisms that have been levelled against municipal bond rating services? What are the advantages and disadvnatages of replacing the present services with one done by a Federal agency?

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    First let us begin by defining what a municipal bond is. Municipal bonds are are debt obligations of state and local governments. Moody's classifications signify the following: Aaa -best quality; Aa -high quality; A -upper medium grade; Baa -medium grade (some speculative characteristics); Ba -characterized by uncertainty; B -lacks characteristics of desirable investments; Caa -poor standing; Ca -speculative to a high degree; C -lowest rated class of bonds.
    <br>The two main bond rating firms are Moody's and Standard and Poors--the ratings provided are bases on the creditworthiness of the issuer. Note: bond rating are concerned ONLY with the possibility of default. Municipal bonds are rated in the same manner as corporate bonds because they have varying ...

    Solution Summary

    Municipal bond rating services are assessed.