Life insurance companies that have not been around more than 20 years may not be reliable. Even the ones that have been around 30 years or so need to have very good credit ratings and business models for you to expect them to be around in 30 years or so to pay a possible death claim. To determine whether an insurance company is reliable, it is necessary to look at their financial strength rating. A financial strength rating is a letter-grade provided by major rating services, such as Moody’s Investor Services, Fitch Ratings, and others. For example, Moody’s Investor Services ratings are as follows: AAA, AA, A, BBB, BB, etc. Continue reading...
BB+ — S&P / Fitch Ba1 — Moody’s This rating is the highest non-investment grade category that the ratings agencies will give to a bond. When rating bond issues based on their risk of default, investment grade bonds will range from AAA/Aaa to BBB-/Baa3, in the parlance of Fitch, Moody’s and S&P. Below this level, starting with the BB+/Ba1 rating, are High Yield Bonds, also known as Junk Bonds. If an investor chooses wisely, high yield bonds can be some of the best investments in his or her portfolio. The further down the ratings scale a bond appears, the higher the yield; but there is also a higher risk of default. The higher yield paid out on higher-risk bonds is known as the “risk premium,” which is a concept present throughout the investment world. Continue reading...
The possibility of a company or municipal government defaulting on their bond obligations, usually by going bankrupt, is a real one. For this reason, all bonds are rated according to the financial stability of the issuer. A look at the history of corporate and municipal debt will illuminate the fact that the possibility of the issuer being unable to pay its obligations to bondholders is a very real one. There is an established system of bond ratings that gives a rough estimate of the bond's reliability. Continue reading...
An A-note describes a slice of the top tranche of an asset-backed security. Asset-backed securities are categorized into tranches for quality, and an A-note is a share of the best available tranche. Asset-backed securities include Collateralized Mortgage Obligations (see — CDOs), Mortgage-Backed Securities, Credit Card Debt, and other kinds of cash flows, especially related to debt instruments that have been pooled and sold to investors. This shifts the risk from the lending institution to the underwriters and investors in the asset-backed security. Continue reading...
BB — S&P / Fitch Ba2 — Moody’s A bond rated BB/Ba2 is just below investment grade and is a somewhat speculative financial instrument. Fitch, Moody’s, and Standard & Poor’s (S&P) are the Big Three major credit ratings institutions. They each have proprietary formulas for assessing the financial strength and creditworthiness of companies, municipalities, insurers, and bond issues, The most common use of these ratings is for bonds, as investors seek to learn how likely it is that a bond will default on its payments. Continue reading...
B- — S&P / Fitch B3 — Moody’s In the world of junk bonds, a B3/B- rating is about as low of a rating as most investors will venture to explore. Bonds are rated by independent ratings institutions known as the Big Three: Moody’s, Fitch, and S&P. Two companies, S&P and Fitch, use the same symbols, and the B- in this example belongs to them. Moody’s has its own system, and the B3 in this example is theirs. Continue reading...
A — S&P / Fitch A2 — Moody’s Such ratings are given to bond issues and insurance companies, primarily, and this particular one is in the Upper Medium band of the Investment Grade ratings. Investment grade bonds are considered to have a very low possibility of default. The ratings go up to AAA/Aaa and all the way down to DDD/D, with Investment Grade bonds being in the range of AAA/Aaa to BBB-/Baa3. Continue reading...
A credit rating is given to a company or debt issue after a disinterested third party evaluates the strength of the business or cash flow and rates its ability to pay all of its liabilities. Third-party institutions such as Standard & Poor’s (S&P), Moody’s, and Fitch will conduct research in order to give investors an idea of how likely a business, bond issue, or insurance company can pay all of its obligations. Continue reading...
Explore the world of Business-to-Business (B2B) with this comprehensive guide. From traditional interactions to e-commerce evolution, uncover how B2B drives industries like automotive, property management, and more. Discover the contrasts between B2C and the future of inter-business transactions. A must-read for business professionals! Continue reading...
Junk bonds, often shrouded in mystery and intrigue, are a staple in the financial world. These high-yield bonds, while promising attractive returns, come with their fair share of risks. What makes them "junky"? Why do some investors flock to them while others steer clear? This guide demystifies junk bonds, from their core definition to real-world examples like Tesla and Ford. Whether you're an investor seeking to diversify your portfolio or a curious mind eager to understand the financial market's intricacies, this comprehensive exploration of junk bonds offers insights into their allure, risks, and role in the investment landscape. Continue reading...
Secure Your Retirement with Transamerica Funds 🚀 Facing low-interest rates? Discover the top 5 Transamerica funds for a prosperous retirement. From tax-free munis to high-yield bonds, we've got your diversified nest egg covered. Explore now! 💰 #RetirementPlanning #Investing Continue reading...
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During the week of July 1 to July 5, financial markets experienced a dynamic range of performances. Base metals saw an uptick, while natural gas prices dropped sharply. Major indexes and cryptocurrencies showed significant movements, reflecting broader market trends and investor sentiments. Notable gains in sectors such as technology and commodities contrasted with declines in healthcare and industrials, providing a comprehensive overview of the week's economic landscape. Continue reading...
BB- — S&P / Fitch Ba3 — Moody’s The BB-/Ba3 rating is given to bonds and companies who have a moderate risk of default, and this rating appears around the middle of a scale with over 20 ratings. There are two symbols in this example which are the same rating: Fitch and S&P use BB-, and Moody’s uses Ba3. These are the Big Three of the Credit Ratings Agencies (CRAs) that the SEC has sanctioned to issue ratings which can be used for internal regulation within industry groups. Continue reading...
The world of options trading offers a plethora of strategies for traders to capitalize on market movements. One such strategy, the bear call spread, is a powerful tool used to generate premium income while mitigating risk. In this article, we'll delve into the definition, examples, and formula behind the bear call spread to help you understand its intricacies and potential benefits. Continue reading...
Unlock the secrets behind the FAANG stocks phenomenon! Dive into the world of Meta, Amazon, Apple, Netflix, and Alphabet (formerly Google) in this insightful exploration. Discover their rise, market impact, and the ongoing debate about their valuations. Are they overvalued, or is their dominance justified? Explore the allure and accessibility of these tech giants. Don't miss this captivating journey through the FAANG universe. #FAANGStocks #Investing #TechGiants Continue reading...
Discover November's top-performing stocks across retail, technology, and marine shipping, featuring Abercrombie & Fitch, Dell, Zoom, and Golden Ocean Group. Uncover market trends driving growth in specialty stores, software, and shipping sectors! Continue reading...
The London Interbank Offered Rate (LIBOR) was once a globally accepted benchmark interest rate, playing a pivotal role in the financial industry. It represented the average interest rate at which major global banks borrowed from one another, spanning various currencies and maturities. However, the legacy of LIBOR is marred by manipulation, scandals, and concerns about its credibility. In this article, we will delve into the world of LIBOR, its calculation, uses, history, alternatives, and its eventual phase-out. Continue reading...
A- — S&P / Fitch A3 — Moody’s Rating institutions assign various levels of credit ratings to signify the chance of default; the A-/A3 rating is considered Investment Grade, but it is getting closer to the Junk Bond range. If a company or debt issue has a rating of A-/A3, it means that S&P and Fitch have given it an A- and Moody’s has given it an A3 rating. They have their own symbology for their ratings system but these are at the same level on both scales: these ratings are at the 6th or 7th degree from the top possible ratings, which is AAA/Aaa. Continue reading...
Explore Tickeron's Stock Screener to uncover the best stocks in sectors like apparel, tech, and more. Find top picks like Abercrombie & Fitch, HP, Salesforce, and Costco, and make informed investment decisions with ease. Dive into a world of potential gains today! Continue reading...