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Consider a corporation that is worth 160 (million) in the Up-state and 60 (million) in the Down-state. Suppose the firm owes creditors a total of

Consider a corporation that is worth 160 (million) in the Up-state and 60 (million) in the Down-state. Suppose the firm owes creditors a total of 70 (million) to be paid at date 1.

According to the Law of One Price, what is the date 0 value of corporation,equity and debt?

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