Explain all the model and experiments of Robert Merton

Question

Explain all the model and experiments of Robert Merton.

Answer 1

Credit risk became huge, big, in the 1990s. Practice and theory progressed at rapid speed throughout this period, urged on by several important credit-led events, as the Long Term Capital Management mess (LTCM) was introduced by Merton who had worked on credit risk two decades previously. The subject really took off, not only along the lines proposed through Merton but also by using the Poisson process as the model for the random arrival of an event, as default or bankruptcy.