Term structure of credit risk approach models are also known as:

Question

Quizplus · Accepted Answer

Term structure of credit risk approach models are commonly known as reduced-form models. They focus on the probability of default rather than the underlying factors that may lead to default, such as financial ratios and market conditions. These models use empirical data to estimate the likelihood of default at different points in time, resulting in a term structure of credit spreads or default probabilities. Mortality rate models, RAROC models, and structural models are all different types of credit risk models but are not synonymous with term structure of credit risk approach models.

Term Structure of Credit Risk Approach Models Are Also Known