CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

The loss given default in structural models is:

A. AT - K.
B. K - AT.
C. K - max[K - AT, 0]
Correct Answer: B

A company defaults on its debt if the value of its assets falls below the amount of its liabilities and that the probability of that event has the features of an option.

User Contributed Comments 1

User Comment
davidt876 and C would be the value of the debt given default?
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