How does the Jarrow-Turnbull-Lando model differ from the basic Jarrow-Turnbull model?
What will be an ideal response?
The Jarrow-Turnbull model is a straightforward model of default and recovery. It assumes that no matter when default occurs, the recovery payment is paid at the maturity date. By making the supposition that the recovery payment is made at maturity, Jarrow and Turnbull assume away any dependency between the bond price and the conditional default probability.
The basic Jarrow-Turnbull model has been extended by Jarrow, Lando, and Turnbull to include different credit ratings rather than of just two states (default and survival). That is, instead of a single state for default (and survival), there can be a number of probabilities, each for the probability of moving from one credit rating to another credit rating. This is done by supplying the probabilities for these rating movements where the probabilities can be obtained from the rating transition tables published periodically by the rating agencies. Thus, such an extended reduced-form model deals with migration risk of credit ratings rather than default risk.
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Scott, a minor, sells his digital camera to Megan, who then sells it to Sherry. Under these circumstances:
a. Scott retains the power of avoidance of the contract, since he is a minor, even after the property is sold to Sherry. b. if Sherry is a good faith purchaser for value and she buys the camera before Scott elects to rescind, no rescission is permitted. c. Megan and Sherry both received a voidable title regardless of whether they contracted in good faith. d. if Scott wants to rescind the transaction after the sale to Sherry, a good-faith purchaser for value, he has no remedy or recourse.
A registration statement generally includes all of the following EXCEPT a:
a. financial statement certified by an independent public accountant. b. description of the business. c. description of the management. d. projection of future growth potential.
Refer to Scenario 9.2. Which of the following situations results in the wholesaler's total cycle plus pipeline inventories amounting to 550 units?
A) The plant shipment lot size of 400 and plant-to-wholesaler lead time of 2 weeks B) The plant shipment lot size of 500 and plant-to-wholesaler lead time of 3 weeks C) The plant shipment lot size of 400 and plant-to-wholesaler lead time of 3 weeks D) The plant shipment lot size of 600 and plant-to-wholesaler lead time of 4 weeks
Ethics generally refers to accepted standards of right and wrong in a society
a. True b. False Indicate whether the statement is true or false