In the Context of the KMV Credit Monitor Model, the Market

question 19

Multiple Choice

In the context of the KMV Credit Monitor Model, the market value of a risky loan made by a lender to a borrower can be expressed as:

• A) F(r) = Be^-i/r[(1/d)N(h₁) + N(h₂)]
• B) F(r) = Be^-ir[(1/d)N(h₁) + N(h₂)]
• C) F(r) = Be^-ir[(1/d)- N(h₁) + N(h₂)]
• D) F(r) = Be^-ir[(1/d)N(h₁) \(\times\) N(h₂)]