Given that the freight rate is the price of a transportation service that cannot be traded or stored; the traditional form of the efficient market hypothesis (EMH) does not apply to the freight rate price process. However, the notion of market efficiency still applies in the freight market. In...

The aim of this paper is to investigate conceptually how charter market default risk will vary with freight market conditions, charter duration, and the financial situation of the charterer. The primary contribution is the development of a mathematical framework and numerical methodology to...