In this context, a risky bond is one for which there is a nonzero probability of default. Conceptually, valuing such a bond is child’s play: you calculate the (present) value of the bond assuming no default (which the curriculum abbreviates VND: Value, No Default), then subtract the (present) value of the expected credit losses (i.e., […]
This article is for members only. You can become a member now by purchasing a
CFA® Level II Fixed Income Membership, CFA® Level II Membership
This will give you access to this and all other articles at that membership level.