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This paper develops a dynamic trade-off model of optimal capital structure that takes intoaccount the fact that most firms have both invested assets and growth opportunities. Thesetwo sources of value react quite differently to business cycle risk. In particular, growth optionsare more sensitive...
Persistent link: https://www.econbiz.de/10009305114
jointbehavior of credit spreads, option implied volatilities, and stock returns. Beliefs heterogeneity influences the pricing … kernelin a way that supports more realistic credit spreads and a co–movement with stock return volatility and option …
Persistent link: https://www.econbiz.de/10005868970