- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 29. Credit Analysis Models
- Subject 3. Structural and Reduced Form Credit Models
CFA Practice Question
Reduced-form models aim to explain:
B. when default occurs.
C. how likely default occurs.
A. why default occurs.
B. when default occurs.
C. how likely default occurs.
Correct Answer: B
This is known as the default time and can be modelled using a Poisson stochastic process.
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