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Basic Question 1 of 11
According to the option analogy, the probability that the debt defaults at time T is equal to the probability that:
B. The asset's value falls below the face value of the debt at time T.
C. The asset's value becomes zero or less.
A. The asset's value falls below the present value of the debt at time t.
B. The asset's value falls below the face value of the debt at time T.
C. The asset's value becomes zero or less.
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I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain structural and reduced-form models of corporate credit risk, including assumptions, strengths, and weaknesses;
CFA® 2025 Level II Curriculum, Volume 4, Module 29.