I am modeling for CCF to calculate EAD. Can anyone please tell me the logic if i use the transformation of the target variable (CCF) for modeling so that the value is bounded between 0 and 1. How would i arrive at the equation CCF(transformed) = - ln (1-CCF).
what might be the logic behind it? I am going through a book "credit risk analytics" by Bart Baesens.
It is mentioned Measure:CCF,
lower bound: - infinity
upper bound: 1
Transformation : - ln (1-CCF)
Can anyone tell me how would we arrive at the transformation equation mentioned above?