In this article we discuss the fundamentals of pricing of the popular financial instruments. The basic point of our approach is to extend the present value benchmark concept. The present value valuation approach plays the similar role as The Newton Laws in the Classic Mechanics. Thus our primary...

We investigate how the credit cycle affects the link between bond spreads and credit ratings. Using a simple model of the credit assessment process, we show that when the debt market is more opaque, the information content of ratings deteriorates, creating an incentive for investors to increase...

This paper develops a model to assess the potential for unfairness in freeze-out bond covenant exchange offers by highlighting the role played by coordination among bondholders. We show that (i) shareholders have an incentive to always structure an exchange offer unfairly and (ii) the...

This paper develops a model to assess the potential for unfairness in freeze-out bond covenant exchange offers by highlighting the role played by coordination among bondholders. We show that (i) shareholders have an incentive to always structure an exchange offer unfairly and (ii) the...

Looking at the valuation of a swap when funding costs and counterparty risk are neglected (i.e., when there is a unique risk free discounting curve), it is natural to ask "What is the discounting curve of a swap in the presence of funding costs, counterparty risk and/or collateralization". In...