When I work with a group that wants to complete a task but spends no time developing a cooperative relationship, I generally find their work product to be merely satisfactory. The product meets minimum standards, but typically the dynamic within teams that spend no time on relationship development is not condusive to innovation or creativity. [...]
The management option to alter the capital structure establishes the link between structural models and fundamental credit analysis. It may be remembered that in the Merton framework the strike price of both the call and the put option on the firm’s assets changes when the capital structure of a company changes. This is undoubtedly one [...]
The third and last type of quantitative credit models that we want to mention briefly are factor models. In contrast to both the structural and reduced-form models, the factor model does not attempt to model default. Rather, linear regression is used to assess the relative richness or cheapness of individual credits. The factor model attributes [...]