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Ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), like Standard and Poor’s and Moody’s, are considered a better tool than investor surveys for measuring sovereign risk. Specifically, credit ratings have four key advantages as a sovereign risk measure. Which of the following statements incorrectly identifies one of these advantages? A. Credit rating organizations have clearly defined criteria and methodologies for assigning their ratings. B. Rating organizations regularly review and report on how closely their ratings correspond to observed historical default rates. C. Empirical evidence shows corporate credit default swap spreads react significantly to rating changes by credit rating organizations. D. The accuracy of credit ratings has a direct impact on whether the credit rating organizations gain market share. |