We assume an entrepreneur (borrower) must borrow money from a lender (bank) to start a project in a single-period model. The debt is secured by an insurer who takes the project and pays the lender all the outstanding principal and interest in case of default. The borrower grants the insurer a...

We compare two competitive financing schemes, loan guarantees and security token offerings (STOs), for a risk-averse entrepreneur to start a project. We show that, if information is symmetric, STOs are better than loan guarantees. Under asymmetric information, we derive the highest equity price...

This paper develops a general continuous-time evolutionary finance model with time-dependent strategies. It is shown that the continuous model, which is a limit of a general discrete model, is well-defined and if there exists one completely diversified strategy in the market, then there is no...

This paper addresses the investment and financing decisions of entrepreneurs entering into option-for-guarantee swaps (OGSs). OGSs significantly increase investment option value. Entrepreneurs initially accelerate their investments and then postpone them as funding gaps grow. Guarantee costs...

We study an equilibrium pricing of a new invented equity-for-guarantee swap and optimal capital structure of a firm, which enters into the swap. We present closed-form corporate security prices and guarantee cost, the percentage of the firm's equity allocated by the firm/borrower to an insurer...

We consider a perturbed renewal risk model where the inter-claim times are phase-type distributed and the dividend payment is a step function depending on the current surplus level. We obtain the integro-differential equations with boundary conditions for the moment-generating functions and the...