
Andrew Lapthorne - Thematic Baskets and Strong Balance Sheets (S4E13)
Flirting with Models
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How to Measure the Quality of a Business?
Merton's distance to default is one of the key metrics that we used to measure credit risk. The amount you can borrow, historically at least, is contingent on essentially the volatility of your business. I always used to say that equity markets and credit markets were basically two people waving at each other in a building. You just hope someone doesn't turn up grumpy because then it's game over.
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