Question: Moodys Analytics Expected Default Frequency or EDFT, is one of the most popular alternative indicators used in the financial industry to estimate the probability of

Moodys Analytics Expected Default Frequency or EDFT, is one of the most popular alternative indicators used in the financial industry to estimate the probability of default (PD) of counterparties. Briefly describe the following figure and how it's used to measure PD. Value Distribution of asset value at horizon Asset Volatility (1 Std Dev) Asset Value Distance-to-Default= 3 Standard deviations Default Point EDF 1 Yr Time Today Moodys Analytics Expected Default Frequency or EDFT, is one of the most popular alternative indicators used in the financial industry to estimate the probability of default (PD) of counterparties. Briefly describe the following figure and how it's used to measure PD. Value Distribution of asset value at horizon Asset Volatility (1 Std Dev) Asset Value Distance-to-Default= 3 Standard deviations Default Point EDF 1 Yr Time Today

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