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Structural Model Assumptions

January 4, 2016
  • Company assets are traded in a frictionless arbitrage-free market with a time T value that has a lognormal distribution with mean μ T and variance σ^2T
  • The risk-free interest rate is constant over time
  • The company has a simple balance sheet structure with only one class of simple zero-coupon debt.

From → Asset Valuation

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