英语论文网

tic in nature. The corporate bond structure is dynamic in nature because corporate agencies invest in the pools of investment projects. These projects can perform well and it can under perform as well depending up on the situation and conditions. Corporate agencies can change their strategy on how these investment projects are carried out. In case of any losses, the investment company can enhance the credit by adding more funds there by adding much need equity. The enhancement of credit can protect investors from increased risk. This flexible nature of corporate bonds made them dynamic in nature.

If we consider RMBS structure, it is static in nature. It is static in nature because it has fixed pool of assets. The performance of these pools depends on borrower's ability to repay timely installments and principal. These pools can never outperform as there is no scope for outperform because it is based on payments by borrowers which are fixed. There are more chances of these pools to underperform because there are more chances of borrower getting defaulted in the payments due to social and economic reasons. So change in originator standards can highly influence the performance of these securities.

An investment in corporate bonds is an investment in a proven ongoing dynamic investment strategy. An investment in a mortgage pool is an investment in a static pool of unproven fixed-income investments.

Issuers of structured finance products wanted RMBS to be rated on the same scale astraditionalbonds so that investors think structured finance has same kind of risk that of bonds.(Mason and Rosner, 2007). This can be clearly proved here that despite of differences in the risk rating agencies rate RMBS and corporate bonds on same scale thus creating conflict of interest.

According to(Committee on the Global Financial System,2005), and(Mason and Rosner, 2007) rating agenciesNeverdisclosed completely theirmethodologies they use to rate RMBSand keyassumptions and rating criteria. This can be proved by looking at the moody's models used for the rating and their methodologies. The methodologies were not clearly explained and there are many parameters those are not explainedin the models andare used by analyst according to situation in the rating process. This practicerise concerns about rating process and transparency of the rating process.

The rating agencies main role is to act as an intermediate between investors and issuers. This trust of being intermediate has been broken by rating agencies by charging issuers for rating products instead of getting paid by subscribers who subscribe for these ratings to invest in these products. Because of shift in the axis of being intermediate, these rating agencies got paid from issuer who in turn profited rating agencies by gaining millions of dollars.

If we look at 16 which gives information of net revenue of the moody's over a period of eight years from 2000 till 2008, we can easily find the net revenue moody's increased rapidly over years till 2007 where credit crisis has halted the growth. Because of crisis new issuance has decreased there by decrease in the net revenue. But due to past issuance and rating outstanding moody's still get revenu本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。