The probability that the company’s asset value falls below the face value of the debt and the loss given default is given by this shortfall.

The equity is viewed as a European call option on the company’s assets.

You’ll be most likely given four interest rates or discount factors.

Maturity | Annualized Rate | Discount Factor |
---|---|---|

90 | R1 | 1 /(1 + (R1 * (90/360))) = Z1 |

180 | R2 | 1 /(1 + (R2 * (180/360))) = Z2 |

270 | R3 | 1 /(1 + (R3 * (270/360))) = Z3 |

360 | R4 | 1 /(1 + (R4 * (360/360))) = Z4 |

C = (1 – Z4) / (Z1 + Z2 + Z3 + Z4)

Assuming quarterly date **Annualized Swap Rate = 4C or C/(90/360)**

Firm Name claims compliance with the CFA Institute Code of Ethics and Standards of Professional Conduct. This claim has not been verified by the CFA Institute.

**Investment Banking **or **Financing Activities**

It should be based on the accuracy of recommendations over time.

Analyst compensation can also be tied to the performance of the entire group/firm.

#### Cannot Ensure

Actual events will often differ from forecasts on which investment recommendations are made.

Acquirer’s Gain = Synergies – (Price paid for Target – Value of Target)

Acquirer’s Gain = Synergies – Premium Paid

IFRS | USGAAP |
---|---|

+ Current Service Cost + Past Service Cost + Discount Rate * (Beginning PBO – Beginning Plan Assets) |
+ Current Service Cost + Amortization of Past Service Cost + Interest Cost (= Discount Rate * Beginning PBO) – Expected Return on Plan Assets (= Expected Rate of Return * Beginning Plan Assets) +/- Amortization of Actuarial Gains / Loses |

Pension Expense on Income Statement | Pension Expense on Income Statement |

+ Current Service Cost

+ Past Service Cost

+ Interest Cost

– Actual Return on Plan Assets

+/- Actuarial gains / loses

Total Period Pension Cost

**Directly estimate the statistical parameters**

For most variables the historical or cross-sectional data will be insufficient or unreliable.