Do any standard/generic approaches exist on how to extend an interest rate model to incorporate credit risk? The first thing that comes to mind would be to just model the credit spread separately - ...
Given a bond and a stock issued by the same issuer, what is the appropriate ratio of bond-to-stock one should hold in order to minimize the specific risk to that issuer? Equivalently, what is the ...
How do you use bond prices/yields to infer probabilities of default? I would think of it as follows: Create a relationship between default free (e.g., Germany) and defaultable (e.g., Greece) bond ...