What is a common feature of all structural models?
What will be an ideal response?
The common feature for all structural models (e.g., the BSM model and its extensions) is that default can be viewed as some type of option by the equity owners on the assets of the firm, and that the option is triggered (i.e., the corporation defaults) when the value of the corporation's assets declines below a certain default point. The application of option pricing theory avoids the use of a risk premium and tries to use other marketable securities to price the option. The use of option pricing theory provides an improvement over traditional methods for valuing corporate bonds. The outputs of structural models show how the credit risk of a corporate bond is a function of the issuer's leverage and the volatility of the issuer's assets. The output of these models also provides information about how to hedge the default risk, which was not obtainable from traditional methods.
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A major manufacturer of men's shaving products has developed a prototype of an electric shaver featuring a vacuum attachment to capture virtually all hair. It's targeted to men who have facial hair - beards, mustaches, or goatees who like a trimmed appearance but dislike all the hairs that fall into the sink or bathroom counter top. The engineers create several prototypes and have members of their marketing research team gauge consumer response to the new product by conducting personal interviews with men who have facial hair. The company hopes that if the product is favorably received, the new product will be more successful in the marketplace. This is an example of:
a. ?concept testing b. screening c. ?test marketing d. ?commercialization
Considering various factors within the system as well as outside the system that may influence the process and outcomes is a description of a characteristic of ______ approaches.
Fill in the blank(s) with the appropriate word(s).
List at least three types of information can be used as an attention getter in the introduction of a speech. Give an example of one of the types.
What will be an ideal response?
Johnnycake Restaurant uses a periodic inventory system and the gross method of accounting for purchases. Prepare general journal entries to record the following transactions for Johnnycake: Aug. 10Johnnycake purchased merchandise on credit from Foster Foods for $9,000, terms 2/10, n/30, FOB destination. Transportation costs of $350 were paid by Foster. 12Johnnycake returned $600 of merchandise from the August 10 purchase. 19Johnnycake paid Foster for the August 10 purchase.
What will be an ideal response?