Rating is a quantitative measure used by analysts and companies to evaluate the creditworthiness of stocks, bonds, and other financial instruments. This assessment tool involves assigning ratings or scores to these securities based on their ability to generate returns or meet their financial obligations such as meeting loan repayments. Rating serves as an important indicator of the underlying risk associated with a security and therefore serves as an important decision-making tool when making investments.

Rating of bonds is beneficial since it helps investors and lenders to determine the creditworthiness of the bonds issuer, that is, their ability to make regular interest payments, repay their debt and meeting other financial obligations. Rating agencies such as Standard & Poor's, Moody's Investors Service, and Fitch Ratings will rate bonds given to them for consideration. Generally, bonds that carry a higher rating are perceived as being of higher quality, with the highest-rated being considered the lowest-risk and with the lowest-rated considered to be the most riskier.

When it comes to stocks, rating can be done by buy-side or sell-side analysts who will assess the performance of the stock and assign ratings accordingly. Ratings typically ranges from “buy’, “hold” to “sell”, depending on the stock’s outlook and potential to deliver returns. Investors and financial instituion often use the ratings as another gauge to evaluate the attractiveness of the stock before making the decision to buy or sell them.

Overall, rating is a powerful tool for investors and financial institutions for making well-informed decisions when making investments. It helps them to understand the underlying risks associated with the security and make an assess the returns potential of an investment. Ratings should be used as a guide rather than a concrete guarantee, however, and should always be accompanied by further research and due diligence.