Australian Diatomics has $10$ million outstanding shares trading at $ A$25$ per

share. It also has a large amount of debt outstanding, all coming due on one

year. The debt pays interest at $8$ percent. It has a par $($face$)$ value of $$4350$

million, but is trading at a market value of only $$4270$ million. The one$-$year

riskfree interest rate is $6$ percent.

$($a$)$ Write out the put$-$call parity formula for Diatomics' stick, debt, and assets.

$($b$)$ What is the value of the default put given up by Diatomics; creditors?

$($Brealey$,$ Myers & Allen$)$