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ABC Corp. stock is trading for $10/share. ABC has 30 million shares outstanding and a market debt-capital ratio =) of 0.2. ABC's debt is zero-coupon
ABC Corp. stock is trading for $10/share. ABC has 30 million shares outstanding and a market debt-capital ratio =) of 0.2. ABC's debt is zero-coupon debt with a 7-year maturity and a yield to maturity of 6%. Which of the following statements is most correct? D D+E ABC's equity can be expressed as a call option on the firm's assets. The maturity is 7 years, the market value of underlying assets is $375 millions; the strike price is $113 millions. ABC's equity can be expressed as a call option on the firm's assets. The maturity is 7 years, the market value of underlying assets is $360 millions the strike price is $90 millions. ABC's equity can be expressed as a call option on the firm's assets. The maturity is 7 years, the market value of underlying assets is $360 millions; the strike price is $40 millions. ABC's equity can be expressed as a call option on the firm's assets. The maturity is 7 years, the market value of underlying assets is $375 millions, the strike price is $50 millions
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