rating
noun
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Definition of rating
Examples of rating in a Sentence
Recent Examples on the Web
Smith had 43 digs (2.31 passer rating) and served 86.5 percent (five errors in 37 attempts) in six matches. — Dennis Victory, al, "See Week 1 volleyball Player of the Week winners in North, Central and South regions," 30 Aug. 2019 Mullens produced the better numbers last year (90.8 QB rating to Beathard’s 81.8) but Beathard has more experience (13 starts to Mullens’ eight). — Jim Ayello, Indianapolis Star, "Insider: Looking at backup quarterbacks Colts could acquire in coming days," 30 Aug. 2019 After five years of low performance ratings, the Colorado State Board of Education is allowed to order schools to hire an external manager, convert them into charter schools or close them. — Meg Wingerter, The Denver Post, "Six Denver-area schools could face state action for low scores," 30 Aug. 2019 Of the six UC Berkeley buildings with the poorest ratings, the oldest is Durant Hall, built in 1911 when William Taft was the country’s president, movies were silent and musical records were cylinders. — Angela Ruggiero, The Mercury News, "Six UC Berkeley buildings pose serious life safety risk in earthquake," 29 Aug. 2019 Maybe the Ravens’ most impressive rookie quarterback in preseason history, Kyle Boller (86.4 rating), is remembered for his recurring regular-season flops. — Jonas Shaffer, baltimoresun.com, "With potentially record-breaking preseason, QB Trace McSorley has ‘earned the right’ to be in Ravens’ plans," 28 Aug. 2019 The poorer a credit rating or outlook, the more a school pays in interest. — David Jesse, Detroit Free Press, "MSU: Nassar deserved criminal penalties, but we can't be held liable for his sexual assaults," 27 Aug. 2019 If Bruce Willis had stepped out of a shower and was toweling himself, or was reaching for a telephone and there was a fleeting glimpse of nudity, [the rating] would probably be an R. — Mehera Bonner, Marie Claire, "Embrace the Female Gaze: 18 Times Male Actors Did Full-Frontal on Screen," 21 Aug. 2019 Prince Harry boasted a 71 percent overall rating, a couple points ahead of Prince William at 69 percent. — Chloe Foussianes, Town & Country, "Queen Elizabeth Is the Most Popular Royal, Followed Closely by Prince Harry," 19 Aug. 2019These example sentences are selected automatically from various online news sources to reflect current usage of the word 'rating.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for rating
rating
nounFinancial Definition of rating
What It Is
In personal finance, the term rating commonly refers to a credit rating score issued by the Fair Isaac Corporation (a "FICO score"). A person's credit rating indicates how creditworthy he or she is.
In corporate finance, rating usually refers to a "grade" assigned to a bond, bond issuer, insurance company or other entity or security to indicate its riskiness. Securities analysts often issue ratings on stocks; these ratings are usually "Buy," "Sell" or "Hold."
How It Works
Bond rating agencies like Moody's and Standard & Poor's (S&P) provide a service to investors by grading fixed income securities based on current research. The rating system indicates the likelihood that the issuer will default either on interest or capital payments.
For S&P, the ratings vary from AAA (the most secure) to C.
For Moody's, the ratings go from Aaa to D, which means the issuer is already in default.
Only bonds with a rating of BBB or better are considered "investment grade." BBB bonds are considered to be suitable for investment by institutions. Anything below the triple-B rating is considered to be junk, or below investment grade. Bond ratings are periodically revised based on recent data.
Treasury bonds are not rated because they are backed by the "full faith and credit" of the United States government. They are considered to be the safest of investments because the government has the power to levy taxes in order to pay its debts.
Why It Matters
Ratings have huge influence on the price and demand for certain securities, particularly bonds: The lower the rating, the riskier the investment and the less the investment is worth. Low ratings often lead to less trading activity and thus liquidity problems. This is why downgrades (or rumors of downgrades) in an issuer's credit rating can have a significant impact on its securities and on the market or industry.
Bonds are not the only securities affected by credit ratings, however. Preferred stock prices can move sharply when the issuer's credit rating changes (as this is an indicator of the issuer's ability to meet preferred dividend obligations). Securities that are convertible into a company's debt are also affected by credit ratings, especially if the convertible security is trading near or above the point at which the holder may convert the security to debt.
Low ratings are not always bad. They simply mean there is more risk associated with an investment and thus more potential for higher returns. In fact, many income investors actively enhance their returns by dividing securities into sectors based on certain characteristics such as credit rating, yield, coupon, maturity, etc., and then finding those sectors that will perform most favorably for the investor under certain market conditions.
Grouping securities by rating is common because investors are trying to rank investments, buy those positioned to improve and sell those expected to decline. An issuer doesn't need to actually default or lose money for an investor to lose money, however -- remember that the simple threat of default or decline can lower the price of the security. This threat could be sensitivity to adverse business conditions, rumors of a ratings downgrade or inaccuracy of ratings agency opinions.
Source: Investing Answers
rating
noun
English Language Learners Definition of rating
See the full definition for rating in the English Language Learners Dictionary
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nounKids Definition of rating
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