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4. In Mertons equity price model, if a company has a debt of $20 millions to repay in 2 years and if the companies assets

4. In Mertons equity price model, if a company has a debt of $20 millions to repay in 2 years and if the companies assets are estimated to have a current value of $22 millions and a volatility of 25% p.a., then what is the probability of default on the debt? The risk-free rate is 2%.

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