Bargaining over Equity ' S Share in the Bankruptcy Reorganization of Large , Publicly Held Companies

@inproceedings{LoPucki1995BargainingOE,
  title={Bargaining over Equity ' S Share in the Bankruptcy Reorganization of Large , Publicly Held Companies},
  author={Lynn M. LoPucki and William and WHITFORDt and tLynn M. LoPucki},
  year={1995}
}
We develop a simple approach to valuing risky corporate debt that incorporates both default and interest rate risk. We use this approach to derive simple closed-form valuation expressions for fixed and floating rate debt. The model provides a number of interesting new insights about pricing and hedging corporate debt securities. For example, we find that the correlation between default risk and the interest rate has a significant effect on the properties of the credit spread. Using Moody's… CONTINUE READING
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