Credit risk measures using the structural model: assume a company has the following characteristics.
1 answer:
Answer:
a ) Probability of default of debt over the time to maturity is 12.92%
(b ) Expected loss: $39.53
(C ) Present value of expected loss is $45.59
Explanation:
a ) Probability of default of debt over the time to maturity is 12.92%
(b ) Expected loss: $39.53
(C ) Present value of expected loss is $45.59.
Values calculated as shown in my detailed step by step answer at the attachment.
please kindly refer to attachment.
You might be interested in
Answer:
c. total revenue does not change.
Explanation:
A price elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in price of the product, all things being equal.
Mathematically, the price elasticity of demand is given by the formula;
The demand for goods is said to be elastic, when the quantity of goods demanded by consumers with respect to change in price is very large. Thus, the more easily a consumer can switch to a substitute product in relation to change in price, the greater the elasticity of demand.
Generally, consumers would like to be buy a product as its price falls or become inexpensive.
For substitute products (goods), the price elasticity of demand is always positive because the demand of a product increases when the price of its close substitute (alternative) increases.
If the price elasticity of demand for a product equals 1, as its price rises the total revenue does not change because the demand is unit elastic.