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You have observed the following information on two firms: assests 1600 1565 EBITDA -60 70 net income -80 24 liabilities 1275 750 assets volatility 50%
You have observed the following information on two firms:
assests 1600 1565
EBITDA -60 70
net income -80 24
liabilities 1275 750
assets volatility 50% 20%
Without relying on a specific model, which firm would have a higher probability of default under a credit scoring model? Which firm would have a higher probability of default under a market model? Provide explanations for both.
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