- 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
A structural model gets its name because:
B. it depends on the industry structure such as number and size of competitors.
C. it depends on the structure of the economy.
A. it depends on the structure of a company's balance sheet.
B. it depends on the industry structure such as number and size of competitors.
C. it depends on the structure of the economy.
Correct Answer: A
It is also referred to as a company-value model because the key variable is the asset value of the company. The probability of default depends explicitly on the company's assumed liability structure.
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