The Decomposition Engine.
One credit in — six selected covenant and credit terms mapped into option-style teaching estimates, in basis points, with an illustrative residual diagnostic. Read the methodology for the assumptions and limits.
The credit
The options
Your state paths
Upload a state-path file
JSON (schema covenant_state_paths) exported from your own model. The engine estimates the six lines on your paths.
The methodology page documents the path schema. Upload only rights-cleared, non-confidential state data; the public tool does not interpret or validate an agreement.
| Selected option-style line | teaching bps | ± s.e. |
|---|---|---|
| Net option-style teaching estimate | — | — |
| Asset vol | Merton (bps) | Net (bps) | Residual (bps) |
|---|
Re-weight the paths to selected target moments by minimum relative entropy (weighted Monte Carlo), then re-run the teaching estimate. Moment matching does not establish an arbitrage-free risk-neutral measure or a calibrated price.
The full framework — how selected covenant rights map into contingent payoffs, why the builder basket is an upper bound, and how to read the residual diagnostic — is Part VII of the LevFin Book. This engine produces a teaching estimate: option-style arithmetic on the paths you supply, not a calibrated risk-neutral price.