You recently started a new job, and you'll be responsible for examining probabilities of default. Your...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You recently started a new job, and you'll be responsible for examining probabilities of default. Your department has already compiled a database of default information that you will use to estimate future bond defaults using a structural default model similar to Moody's KMV. 2(1) When you examine the sample below from the database of bond issuers you see that there are problems with the way data has been recorded. What suggestions would you make to clean up the database? Year Company 2012 SafeBet 2013 SafeBet 2014 SafeBet 2015 SafeBet 2012 EnergyPlus 2013 EnergyPlus 2014 EnergyPlus EnergyPlus GammaDelta 2013 GammaDelta 2014 GammaDelta 2015 GammaDelta 2015 2012 Industry Financial Services Financial Services Financial Services Financial Services Utilities Utilities Utilities Utilities Asset Value Beg. of Year Volatility Defaults Notes (millions) (millions) $20m $1,050 $900 $950 $1,100 $2,400 $2,600 $2,700 $3,000 $50 $70 $170 $500 No No $40 $30 No 15% No 17% No 15% No $40 No 5% Yes 5% 2 7% 2% No No default data Equity volatility Equity volatility Equity volatility Equity volatility You recently started a new job, and you'll be responsible for examining probabilities of default. Your department has already compiled a database of default information that you will use to estimate future bond defaults using a structural default model similar to Moody's KMV. 2(1) When you examine the sample below from the database of bond issuers you see that there are problems with the way data has been recorded. What suggestions would you make to clean up the database? Year Company 2012 SafeBet 2013 SafeBet 2014 SafeBet 2015 SafeBet 2012 EnergyPlus 2013 EnergyPlus 2014 EnergyPlus EnergyPlus GammaDelta 2013 GammaDelta 2014 GammaDelta 2015 GammaDelta 2015 2012 Industry Financial Services Financial Services Financial Services Financial Services Utilities Utilities Utilities Utilities Asset Value Beg. of Year Volatility Defaults Notes (millions) (millions) $20m $1,050 $900 $950 $1,100 $2,400 $2,600 $2,700 $3,000 $50 $70 $170 $500 No No $40 $30 No 15% No 17% No 15% No $40 No 5% Yes 5% 2 7% 2% No No default data Equity volatility Equity volatility Equity volatility Equity volatility
Expert Answer:
Answer rating: 100% (QA)
Based on the provided sample from the bond issuers database there are several suggestions to clean u... View the full answer
Related Book For
Systems analysis and design
ISBN: 978-0136089162
8th Edition
Authors: kenneth e. kendall, julie e. kendall
Posted Date:
Students also viewed these finance questions
-
Jiffy Bros., Inc. has total capital (V=D+E) of $9.2 million. Jiffy also has 3,281 bonds outstanding that currently sell at 99% of face value ($1,000). If Jiffy has 20,412 shares of stock what is %E,...
-
What does conflict management refer to? 1. The project manager's ability to deal with conflict efficiently. 2. Ignoring conflict on the team. 3. The arguments and disagreements that every team has 4....
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
In Problems 1118, mentally solve each equation. 6x = -24
-
When light with a wavelength of 545 nm shines on a metal surface, electrons are ejected with speeds of 3.10 105 m / s or less. (a) Give a strategy that allows you to use the preceding information to...
-
Prepare any necessary adjusting entries at December 31, 2015, for Maxum Company's year-end financial statements for each of the above separate transactions and events...... Listed below are a few...
-
The Madison Company's income statement and comparative balance sheets as of December 31 of 2019 and 2018 follow: During 2019, \(\$ 27,000\) of cash dividends were declared and paid. A patent valued...
-
You are checking the performance of a reactor in which acetylene is produced from methane in the reaction 2 CH 4 (g) ? C 2 H 2 (g) + 3 H 2 (g) an undesired side reaction is the decomposition of...
-
Carson Sun is president, secretary, treasurer, sole director and sole shareholder of Streez, an S corporation real estate company. He manages all aspects of the company's operations, and he is the...
-
FlyHigh Tech, an early-stage startup, reports to its investors using a balanced scorecard that is prepared at the end of each quarter. During the first and second quarters of the current year, the...
-
Jim Corporation, an investment company, is considering building a 50-unit apartment complex in a growing area near Tucson, Arizona. Due to the town's promising prospects for long-term development, it...
-
ABC company has a capital structure with debt and equity. Debt - $50 million face value bonds maturing in 15 years with a coupon rate of 4% paid semi-annually. Similar bonds are selling at 97.5....
-
Spellbound Inc. will pay a dividend of $1.50 next year, after which the dividends will grow at a rate of 3% per year indefinitely. What is the likely price of Spellbound's shares next year if its...
-
What is the present value of an income stream of $335,000 to be delivered in the fifth year of ownership to an investor seeking an 8 percent return?
-
What technology is commonly used for mass storage in desktops, laptops, smartphones, USB thumb drives, and other handheld devices ?
-
Wilco acquires 3,000 of the 10,000 shares of Seminole Corporation on January 1, 2022, for $900,000. Seminole reports $500,000 of net income in 2022 and paid $50,000 in dividends. What amount of...
-
How has ICT development changed the skills required by e-business managers?
-
Consider a game of poker being played with a standard 52-card deck (four suits, each of which has 13 different denominations of cards). At a certain point in the game, six cards have been exposed. Of...
-
List the four main problems that can occur in developing decision tables.
-
List the advantages of taking a top-down approach to design.
-
Clancy Corporation manufactures uniforms for police departments worldwide. Its uniforms are chosen by many groups because of their low cost and simple but dignified design. You are helping to design...
-
On July 1, Esquire Tables, Inc., began work on Job No. 309. The order is for 45 No. ET42 game tables for stock; date wanted is July 10. Instructions: 1. Open a cost sheet and record the transactions....
-
AutoAnswer, Inc., a manufacturer of telephone answering machines, uses a factory overhead applied rate to charge overhead costs to its manufactured products. The company manager estimates that...
-
Decatur Industries, Inc., maintains a finished goods ledger for all of its manufactured products. Instructions: 1. Prepare a finished goods ledger card for stock no. C45 baseball bats. Minimum...
Study smarter with the SolutionInn App