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Consider a firm with 1b due in 18 months. The current value of the firm's assets is 1.25b and the volatility of the firm's assets
Consider a firm with 1b due in 18 months. The current value of the firm's assets is 1.25b and the volatility of the firm's assets is 10%. What is the probability that the firm remains solvent? Suppose that the continuously compounded risk-free rate is 1%.
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