Question

Economies of scope create a conflict of interest in credit rating agencies. Define economies of scope as it applies to credit rating agencies and explain the conflict of interest.

Answer 1

An economy of scope

Production of one good reduces the cost of producing another associated goods than it's economy of scope. Economies of scope happen while delivering a more extensive assortment of merchandise or administrations pair is more financially savvy for a firm than creating to a lesser extent an assortment, or creating every great autonomously.

Rating agency produce appraisals utilized by speculators, however get a large portion of their income from guarantors or issue both as evaluations charges and as installment for different administrations. This prompts an expected irreconcilable situation.