Use data from the Standard & Poor's Market Insight Database at www.mhhe.com/edumarketinsight to answer the following questions.

1. Use the Financial Highlights section of Market Insight to obtain the Standard & Poor's bond rating of at least 10 firms in the database. Try to choose a sample with a wide range of bond ratings. Next use Market Insight's Annual Ratio Report to obtain, for each firm, the financial ratios tabulated in Table 10.3. What is the relationship between bond rating and these ratios? Can you tell from your sample which of these ratios are the most important determinates of bond rating?
2. Use Altman's Z-score model for public firms, shown below, and the financial statements from Market Insight to calculate the Z-score for the firms in Problem 1. On the basis of the calculated Z-scores, assess the likelihood of bankruptcy for each firm. How well do the Z-scores match up with the bond ratings?

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