Try It Yourself!

Example 1 explores a static problem using the fixed point and fictitious default algorithms.

EXAMPLE 1

EXAMPLE 2

Example 2 explores a static and dynamic problem using all three algorithms.

EXAMPLE 3

Example 3 explores a static problem using 2011 European Banking Data.

Example 4 explores a static problem involving a stress test of the 2011 European Banking Data.

EXAMPLE 4

Negative end wealths are shown in red, indicating bank defaults. Note that banks do not actually have negative ending wealths, an implausible outcome, but rather those banks that exhaust all cash on hand and do not satisfy their obligations have zero wealth.