Defining Parameters

[dwheats]

Why is it that most parameters in equations of the study notes are not explicitly defined? It can make it difficult to understand the equations.

 

[brian.field]

This is a very imprecise post - I'd be happy to offer my thoughts (and I am sure everyone else would be too) if you could be a bit more specific.

 

[ShaktiRathore]

Yes Brian I think he means that all the parameters used in the equation be well defined,
that is If i used the equation ,
EL=PDxLGD then EL,PD and LGD should be well defined that is what is EL,PD and LGD.
EL=Expected Loss, PD=Probability of default and LGD=Loss given Default.
Some more explanation is required for the equations in the notes in terms of parameters. Like I would say if PD increases EL increases keeping the LGD constant and like this stuff.I mean a mini example by taking the numbers can also be given to better clarify the equations.I think he means this only?
Thanks

 

[dwheats]

For sure. It was more a general question but a few examples are on page 4, 7, and 14 of chapter 36 of the BT study notes.

I basically mean defining the parameters in the equations.

So if you have sigma(t,i) and sigma(T,i) in an equation, an explanation of what sigma is (a good guess would be standard deviation) and whether or not T>t or vice-versa. What is i? Is it an asset price? Is it a rate?

 

[brian.field]

Which chapter? Which topic?

 

[bpdulog]

For sure. It was more a general question but a few examples are on page 4, 7, and 14 of chapter 36 of the BT study notes.

I basically mean defining the parameters in the equations.

So if you have sigma(t,i) and sigma(T,i) in an equation, an explanation of what sigma is (a good guess would be standard deviation) and whether or not T>t or vice-versa. What is i? Is it an asset price? Is it a rate?

I usually refer to the GARP text for parameter definitions, they are usually provided right before or after the equation