  Conditions of Stability for explicit finite difference scheme and some
results of numerical analysis for a unified 2 factor model of structural and
reduced form types for corporate bonds with fixed discrete coupon are provided.
It seems to be difficult to get solution formula for PDE model which
generalizes Agliardi's structural model [1] for discrete coupon bonds into a
unified 2 factor model of structural and reduced form types and we study a
numerical analysis for it by explicit finite difference scheme. These equations
are parabolic equations with 3 variables and they include mixed derivatives, so
the explicit finite difference scheme is not stable in general. We find
conditions for the explicit finite difference scheme to be stable, in the case
that it is stable, numerically compute the price of the bond and analyze its
credit spread and duration.
