Calculator of a First-To-Default Option

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  Asset 1 Asset 2
Equity Price ($) Protection in case of Default ($)
Par Value ($) Alpha Clayton
Interest Rate (%) Alpha Frank
Volatility (%) Alpha Gumbel
Time To Maturity (yr) Correlation Coeffcient

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References

F. Black and J.C. Cox, Valuing corporate securities: some effects of bond indenture provisions, Journal of Finance, 31, 351-367 (1976)

R. Brooks, Building Financial Derivatives Applications with C++, Quorum Books (2000).

Z. Drezner, Computation of the Bivariate Normal Integral, Mathematics of Computation, 32 (January 1978), 277-79.

John Hull, Options, Futures and Other Derivatives, 6th edition, Prentice Hall (2005)

H. Joe, Multivariate Models and Dependence Concepts, Chapman and Hall (1997)

D.X. Li, On Default Correlation: A Copula Function Approach, Journal of Fixed Income, 9, 43-54, (2000)

Vechiatto et. al., Copula Methods in Finance, John Wiley & Sons (2004)

Chronology

Date || Version || Author.

3/28/07 || 1.0 || Razvan Pascalau