We use the Moody's KMV model for the measurement of the credit risk of two firms, 1 and 2 , for which the value of assets and liabilities is the same (hence A1 = A2 and L1=L2). Their only difference is that the asset price volatility of firm 1(1) is lower than the asset price volatility of firm 2 ( 2). Then, according to the Moodys KMV model: a. The estimated probability of default of firm 1 will be lower than the probability of default of firm 2 b. The estimated probability of default of firm 1 will be higher than the probability of default of firm 2 c. The estimated probability of default for the 2 firms will be the same