a) Describe the function of rating agencies in the credit market. Characterize the relations between the different players in the market.
b) In the framework of this market: Who can make use of the information provided by rating agencies and who is going to pay for it? Make use of arguments provided by Institutional Economics.
c) Discuss the potential problem for rating agencies to fulfil their duties, i.e. to get the necessary information. How can this problem be solved?
d) Discuss two other solutions to overcome the information problem in market, where the quality of goods and services is difficult to measure (e.g. the quality of teaching at a university).

Credit ratings are an important component of the capital markets and have functioned effectively in the United States for close to a century. The role of credit ratings is also growing and flourishing in many countries outside the U.S. with the development of global capital markets. Credit ratings help the market to evaluate and assess credit risk effectively and efficiently, price debt securities, benchmark issues and create a robust secondary market for those issues. In 1975 the US Securities and Exchange Commission (SEC) set out criteria for what it termed NRSROs -- Nationally Recognized Statistical Rating Organizations. ...