Under the Expected Default Frequency model $($EDF$),$ Distance to default of a firm is increased by $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ and decreased by $\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Question $3$Answer

a$.$

Asset value, firm debt.

b$.$

Asset value, asset volatility.

c$.$

Firm debt, asset volatility.

d$.$

Firm debt, time to maturity.

e$.$

Asset volatility, asset value.