There are two big steps: 1. The firm expresses a risk attitude (orientation) and uses the credit rating migration/transition matrix to derive an implied target probability of default (PD); 2. The Merton model is used to infer a target equity cushion given the target PD

Dora

Subprime the Musical- Series of light-hearted podcasts designed to explain the Subprime Mortgage Crisis. To learn more visit: www.subprimethemusical.wordpress.com E-mail: moneyandsociety@gmail.com In this podcast, I explain what credit rating agencies are and why debt ratings are so important. I also explain how credit ratings ended up screwing up in the mortgage market.

Clifford

AAA LINK www.independent.co.uk

Edna

www.verichipcorp.com The new PositiveID RFID chip will be a tiny implantable device which contains your personal identity, credit history, medical information, and financial details. Don’t worry, it won’t be mandatory right away. The press release announcing this merger notes that it will enable the company to access federal bailout funds as well as raise the company’s stock prices. Canadian? Need some silver, like Maples? www.canadiansilverbullion.com

Jessie

Guest lecture by Brad Walters, General Manager, Financial Analytics, Corporate Scorecard held at the Australian School of Business, UNSW

Henry