(a) Assume the value of the assets of a firm are $22.503 million and the volatility of the logarithmic returns of the asset is 21.02%. The firm has issued a zero coupon bond with face value 20m dollars due at the end of five years. Assume the riskless five year interest rate is 5% per year continuously compounded. Compute the value of the bond, the credit spread of the bond, and the value of the equity. Show all calculations. (b) Say you owned a firm that held illiquid assets that you did not want to sell. The value of the firm is 100m dollars. Your firm had absolutely no debt. It also had no real future investment opportunities that it wanted to pursue. Assume you and your family needed a significant amount of cash for personal reasons. You approached a bank and they said they would give you a loan today of 40m dollars. The terms of the loarequired paying back 60m dollars after 4 years. So the bank gives the firm 40m dollars today. Explain what the firm would do with the money. What would the economic balance sheet look like after all the transactions have taken place. Explain why your ownership stake in the firm is lower than what it was before all these transactions took place.- (a) Assume the value of the assets of a firm are $22.503 million and the volatility of the logarithmic returns of the asset is 21.02%. The firm has issued a zero coupon bond with face value 20m dollars due at the end of five years. Assume the riskless five year interest rate is 5% per year continuously compounded. Compute the value of the bond, the credit spread of the bond, and the value of the equity. Show all calculations. (b) Say you owned a firm that held illiquid assets that you did not want to sell. The value of the firm is 100m dollars. Your firm had absolutely no debt. It also had no real future investment opportunities that it wanted to pursue. Assume you and your family needed a significant amount of cash for personal reasons. You approached a bank and they said they would give you a loan today of 40m dollars. The terms of the loarequired paying back 60m dollars after 4 years. So the bank gives the firm 40m dollars today. Explain what the firm would do with the money. What would the economic balance sheet look like after all the transactions have taken place. Explain why your ownership stake in the firm is lower than what it was before all these transactions took place