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What Is the Merton Model?



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The Merton model is a model used to price corporate debt. The model was developed by Robert C. Merton in 1974. The model takes into account the possibility of default by the firm, as well as the recovery rate in the event of default. The model is used to price debt securities such as bonds. … Read more

Target Cash Balance Definition.



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The target cash balance definition is the desired amount of cash that a company aims to maintain on its balance sheet. This target is usually set by management in order to ensure that the company has enough cash on hand to cover its short-term obligations and to take advantage of opportunities that may arise. The … Read more