Question
C Companys risk-free interest rate is 6 percent. The standard deviation in the rate of change in the underlying asset's value is 12 percent, and
C Companys risk-free interest rate is 6 percent. The standard deviation in the rate of change in the underlying asset's value is 12 percent, and the leverage ratio of C Company is 0.9. C Company has a $350,000 loan that will mature in one year. The value for N(h1) is 0.028, and the value for N(h2) is 0.94.
a. What is the current market value of the loan?
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International Financial Management
Authors: Geert Bekaert, Robert J. Hodrick
2nd edition
013299755X, 132162768, 9780132997553, 978-0132162760
