Question: Why do credit analysts begin with an analysis of the
Why do credit analysts begin with an analysis of the industry in assessing the business risk of a corporate issuer?
Answer to relevant QuestionsWhat is the purpose of a credit analyst investigating the market structure of an industry (e.g., unregulated monopoly, oligopoly, etc.)? Why is credit risk modeling more difficult than interest-rate modeling? What is the motivation for the development of incomplete information credit risk models. How does the treatment of default in structural models and reduced-form models differ? A portfolio manager owns $5 million par value of bond ABC. The bond is trading at 70 and has a modified duration of 6. The portfolio manager is considering swapping out of bond ABC and into bond XYZ. The price of this bond ...
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