Which of the following statements about statistical credit analysis models is most accurate?

A. Structural credit models solve for the POD using observable company-specific variables such as financial ratios and macroeconomic variables.

B. Reduced-form credit models use market-based variables to estimate an issuer’s asset value and the volatility of asset value.

C. Structural credit models define the likelihood of default as the probability of the asset value falling below that of liabilities.