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consider merton's (1974) credit risk model According to this model, equity value of a firm can be represented as a call option. Using the argument
consider merton's (1974) credit risk model
According to this model, equity value of a firm can be represented as a call option. Using the argument of this model, demonstrate how can value of a firm's risky debt and what is the price discount on a credit risky debt. You can use put-call parity and Modigliani Miller expression. Show the work and explain
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