In the study notes for Stulz, the BSM equity price formula's D1 term is (ln(value of assets/face value) +

However, in the attached spreadsheet, the BSM formula is closer to what we're used to seeing: (ln(value of assets/face value) / (std dev asset returns) * T^.5)

Also, the spreadsheet, cell E40 on the tab: "Stulz' Merton" has the variance being ADDED to the risk free rate in d1 (r + (variance of asset returns)/2) , but the study notes under "Calculate the probability of default under the Merton model" show this as being subtracted (r - (variance of asset returns)/2) .

Lastly, under the same heading in the notes, the above formula: (ln(value of assets/face value) / (std dev asset returns) * T^.5) + (1/2)*(std dev)*T is quoted as D2 but in fact seems to be the traditional D1 since we're not subtracting the standard deviation of returns * square root of T.

Why the inconsistencies?

**(r + (variance of asset returns)/2) * T**) / (std dev asset returns) * T^.5However, in the attached spreadsheet, the BSM formula is closer to what we're used to seeing: (ln(value of assets/face value) / (std dev asset returns) * T^.5)

**+ (1/2)*(std dev)*T**Also, the spreadsheet, cell E40 on the tab: "Stulz' Merton" has the variance being ADDED to the risk free rate in d1 (r + (variance of asset returns)/2) , but the study notes under "Calculate the probability of default under the Merton model" show this as being subtracted (r - (variance of asset returns)/2) .

Lastly, under the same heading in the notes, the above formula: (ln(value of assets/face value) / (std dev asset returns) * T^.5) + (1/2)*(std dev)*T is quoted as D2 but in fact seems to be the traditional D1 since we're not subtracting the standard deviation of returns * square root of T.

Why the inconsistencies?

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