Lecture
This lecture covers the importance of bond ratings, how they are constructed, and who pays for them. It also delves into Moody's methodology for rating industries, the differences between rating agencies, and how default rates vary between investment-grade and speculative-grade bonds. The lecture further explores the relationship between corporate taxes, leverage, and the optimal capital structure of a firm, using real-world examples from companies like US Airways and Nestlé. Additionally, it discusses the impact of dividends, share repurchases, and the concept of giving money back to shareholders when a firm lacks profitable investment opportunities.