Enter the default point ($), the market value of assets ($), and the asset volatility (%) into the EDF Calculator. The calculator will evaluate the EDF. 

EDF Formula

The following formula is used to calculate the EDF. 

EDF = DP / MVA * AV

Variables:

  • EDF is the EDF (%)
  • DP is the default point ($) 
  • MVA is the market value of assets ($) 
  • AV is the asset volatility (%) 

To calculate the expected default frequency, divide the default points by the market value of the assets, then multiply by the asset volatility.

How to Calculate EDF?

The following steps outline how to calculate the EDF.

  1. First, determine the default point ($).
  2. Next, determine the market value of assets ($). 
  3. Next, determine the asset volatility (%). 
  4. Next, gather the formula from above = EDF = DP / MVA * AV.
  5. Finally, calculate the EDF.
  6. After inserting the variables and calculating the result, check your answer with the calculator above. 

Example Problem:

Use the following variables as an example problem to test your knowledge.

default point ($) = 50,000,000

market value of assets ($) = 70,000,000

asset volatility (%) = .75

EDF = DP / MVA * AV =  ?