Bonds and Stocks Valuation
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Bonds and Stocks Valuation
Question One
Auditing your company will cost more than a penny, but the potential benefits for investors can be massive. The rating process provides investors with crucial information about the performance and health of the company. The ratings highlight how the company operates regarding revenue generation and the extent to which it complies with existing regulatory policies (Woolley & Sharif, 2021). For instance, Moody’s rating is hierarchical, with the highest grade (AAA) at the furthest point of the valuation scale. A high grade, such as AAA, informs investors that the company offers high-performing stocks and bonds, which is a more secure investment opportunity. A good rating is also important to potential project funders. A high score means the company can maintain a good credit standing. The business will be perceived as reliable, encouraging shareholders and other important parties to collaborate or continue their relationship with the company.
Having your bonds and stocks rated is a strategic business function meant to attract direct investment. If a company pays an external entity to review its product, the act conveys to the consumer that the business is trustworthy, open to criticism and continuous improvement (Brigham, 2016). Stock and bond valuation is a method used to change how investors and customers perceive a company. People are more likely to interact with an organization or consume its products if they are aware that the company values reviews. In another argument, auditing increases operational transparency in the venture, which can incentivize financial institutions to offer favorable credit (Brigham, 2016). Bond and stock ratings are the first aspects potential investors and clients will observe as the face of a business. A great deal of importance should be placed on establishing a good impression in the business market.
References
Brigham, E. (2016). Financial management: Theory and practice. Cengage Learning.
Woollet, K. & Sharif, M. (2021, June 25). What happens when companies pay customers to write reviews? Harvard Business Review, https://hbr.org/2021/06/what-happens-when-companies-pay-customers-to-write-reviews