Question

how are the three ratinf firms Which are: Standard & Poor's Moody's and Fitch Ratings important to the economy?

Answer 1

The mentioned rating firms such as Standard & Poor, Moody's and Fitch Ratings help the investors, debt holders, equity holders, businesses understand the stock and debt ratings and it differs in between the stock and debt evaluation. These help the nation by sharing the advise and suggestions over buy and sell on an equity, and also by passing ratings over debt with respect to it's credit default. This eradicates crisis of debt default in the businesses and the investor's money. Rating agencies either upgrade or downgrade the debt security firm's based on the credit risk, and pass on Buy/Hold/Sell on Stocks which considers the market and business risk's involved. This means the credit agencies help the economy in taking measures for the risk and also works in the field of assessment of a stock or a bond to help eradicate the higher risk faced by the Businesses or the investors. Credit agencies mainly focus on company's competencies, operational efficiency,  market risk and transparency etc to judge it's profitability and reliability.