Reduced form equations

[sachin_patel]

do we need to remember the equations from reduced form? (interpret “lg” = lembda gamma)
I see the CFAI has Grey Box examples on these but no EOCs.. it not needed i’d rather not spend time remembering the crazy equations.
Price of zero coupon bond = D(t,T) = K * e-lg(T-t) * P(t,T)
Probability of default = 1- e-l(T-t)
Expected loss = K*[ 1- e-lg(T-t) ]
PV f loss given default = K*P(t,T) *[ 1- e-lg(T-t) ]
The only equation I remembered so far is Credit spread = lg

 

[sachin_patel]

also it removed superscript.. just imagine that equations are correct..

 

[sachin_patel]

let me ask.. anyone remembered this equations?

 

[Jaishank]

I think you got your answer

 

[sachin_patel]

lol..don’t be like CFA and make me assume
yet I am assuming that I don’t need to remember.. but i do see examples in book and these are not so scary equations to remember so get confused..
may be Mr, sir, S2000 can help..