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ARCHIVE | Criteria | Financial Institutions | Fixed-Income Funds: Funds Rating Criteria: Market Price Exposure Feb 07
Standard & Poors, Feb 2007
Abstract
By far, the most complex part of money market fund analysis is judging a fund's sensitivity to changing market conditions. Absolute stability of net asset value (NAV) is a myth perpetuated by the amortized cost method of pricing securities. All fixed-income securities are subject to price fluctuations based on the following: Interest rate movements; Maturity; Liquidity; Credit risk or perceived credit risk; and The supply and demand for each type of security. These factors are just as true for money market funds as for longer-term fixed-income mutual funds. The amortized cost method of pricing permits money fund investments to be priced by amortizing any discount or premium in the purchase price straight to its maturity. For example, the amortized cost...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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