Name: Dawood George

Subject: Fundamentals of Finance.

Q. What is Pacras Rating Process? Ans. PACRA's Rating Process: The rating process begins with a careful review of an entity's published information. From this review, analysts (normally two, the lead and support analyst, are assigned to each rating assignment) determine what additional data are needed and a detailed questionnaire is sent to the client. An initial rating assessment is made and discussed internally. A discussion agenda is then prepared for a meeting with the client company's senior management. The meeting is wide-ranging, covering the company's financial position, earning trends, operating practices, competitive standing, future prospects, the economic environment and many other issues that can have a bearing on PACRA's assessment. In order to ensure full understanding of their position, companies entrust PACRA with confidential information, which is not disclosed in rating reports but which is certainly taken into account when assigning the ratings. In determining the initial ratings for an institution, a rating proposal is prepared based on the information gathered at the Management Meeting with the company, and is presented to the rating committee (comprising the Chairman, Managing Director, senior executives and the lead analyst). A draft rating report is then prepared and sent to the client for verification of the accuracy and confidentiality of the information in the report. Upon the client's approval, the one-page summary of the report is made public and a press release of the assigned rating is issued. The detailed rating report is sent to the client. *Credit Rating till Half Year 2012 of Different Companies and Banks: 1. Standard Chartered Bank with AAA rating. 2. Habib Metropolitan Bank with AA+ Rating. 3. MCB Bank with AA+ Rating. 4. Saudi Pak Industrial and Agricultural Investment Company Ltd. With AA Rating. 5. Pak Brunei Limited with AA+ Rating. Q. Why Equity securities are riskier than Bonds? Ans. Stocks are shares in a company that can be bought by the investor, effectively giving that investor both an ownership in the company and earnings based on the success of the company. Bonds, on the other hand, act as a loan toward a company or similar entity in which the company agrees to pay the investor back at a certain time with additional, predetermined interest. Different kinds of stocks and bonds that investors can purchase, and their risk, depend largely on what type of investment they are. In general, most bonds are safer than stocks. Read more: Are Stocks Riskier Than Bonds? | eHow.com http://www.ehow.com/about_5317640_stocks-riskier-bonds.html#ixzz1zML3Wu4s

*Credit Rating Scale: A credit rating evaluates the credit worthiness of a debtor, especially a business (company) or a government. It is an evaluation made by a credit rating agency of the debtor's ability to pay back the debt and the likelihood of default. Credit ratings are determined by credit ratings agencies. Credit ratings are not based on mathematical formulas. Credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. A poor credit rating indicates a credit rating agency's opinion that the company or government has a high risk of defaulting, based on the agency's analysis of the entity's history and analysis of long term economic prospects.