Valuation of Lease Contract and Credit Risk
نویسنده
چکیده
Leasing has become a very important financial instrument today. A large amount of literature discusses the determination of lease rate. In this essay, we focus on the valuations of lease contracts and credit risk. First, we introduce both discrete and continuous time models to determine the equilibrium rate of risk-fiee lease contracts. Then, by relaxing the restriction of riskless leases, a model for determining the equilibrium lease rate subject to credit risk is introduced. The model is flexible enough to be applied to a variety of real-world leasing structures, including security deposit, up-fiont prepayment, and lease credit insurance contracts.
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