- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 31. Credit Analysis Models
- Subject 3. Structural and Reduced Form Credit Models
CFA Practice Question
The main advantage of reduced-form models is:
B. they are straightforward in theory.
C. inputs are observable variables, including historical data.
A. Limited liability is the inherent assumption. This is the case for most companies.
B. they are straightforward in theory.
C. inputs are observable variables, including historical data.
Correct Answer: C
Reduced-form models require information generaly available in financial markets.
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