Question
Consider a firm at t=0 with asset value 100. This firm has a zero-coupon bond outstanding with a face value of 100 and maturity T=5
Consider a firm at t=0 with asset value 100. This firm has a zero-coupon bond outstanding with a face value of 100 and maturity T=5 years. Risk free interest rate r is 3%. Volatility of assets is 30%. Use the template given in BlackScholesTemplate.xls. a) What is the value of equity for this at t=0? b) What is the value of debt for this firm at t=0? c) What is the YTM on the bond?
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Foreign Investment And Spillovers
Authors: Magnus Blomstrom
1st Edition
1138025976,1317685121
