In recent years results from the theory of martingales has been successfully applied to problems in financial economics. In the present paper we show how efficient and elegant this "martingale technology" can be when solving for complex options. In particular we provide closed form solutions for...

This paper examines the optimal capital structure of a firm which can choose both the amount and maturity of its debt. Bankruptcy is determined endogenously rather than by the imposition of a positive net worth condition or by a cash flow constraint. The results extend Leland's [1994]...