4. (15 points question total) Miliken Advisory, currently has assets with a market value of $100. Next year the market value of Miliken Advisory's assets is going to increase by 50% or decrease by 50% depending on the state of the economy. The annual risk-free rate of interest is 0%. Miliken Advisory has one share of common stock issued and outstanding as well as one coupon-paying corporate bond outstanding with a face value of $100 with a coupon rate equal to 5% maturing next year. The corporate bond has no callable or puttable features. (a) (5 points) Find today's value of Miliken Advisory's corporate bond and common stock. (b) (5 points) Now suppose that the corporate bond is convertible into 4 shares of common stock at the discretion of the bondholders. If bondholders choose to convert then they lose the coupon and face value payment but get to receive 4 shares of common stock in exchange. Explain whether and when it is profitable for bondholders to convert their corporate bond. What is today's value of Miliken Advisory's convertible corporate bond and common stock? (c) (5 points) Finally, consider a change of terms of the bond contract whereby the corporate bond is now convertible into 49 shares of common stock. How would your answers to part 4(b) change in this case