4.Assume your rm has 20 shares of equity, a 10-year zero-coupon debt with a maturity value of $200 and warrants for 8 shares with a strike price of $25. Calculate the value of the debt, the share price, and the price of the warrant.

5.Patriot Corp. compensates executives with 10-year European call options which is granted at-the-money. If there is a signicant drop in the share price, the companys board will reset the strike price of the options to equal the new share price. Then, the maturity of the repriced option will equal the remaining maturity of the original option. Suppose = 30%, r = 6%, = 0, and the original share price is $100. Calculate the following:

a. the value at grant of an option that will not be repriced

b. the value at grant of an option that is repriced when the share price reaches $60

c. the repricing trigger that maximizes the initial value of the option