Sundaresan, Suresh M.; Wang, Zhenyu - 2010 - Rev.
set equal to the risk-free rate. This structure of contingent capital anchors its value to par throughout the time before …The proposal for banks to issue contingent capital that must convert into common equity when the banks’ stock price … capital prices. Multiple or no equilibrium arises because both equity and contingent capital are claims on the assets of the …
