Corporate bonds 1) You have the following information about the Argenta company, the value of the firm's assets is $ 100.000 million and its volatility is  The company maintains two types of debt, senior debt and subordinated debt. The characteristics of both debts are that both are received in three more years and are acquired at a discount. The senior debt promises to pay ($ 30.000 million) that was equivalent to 3 million bonds The subordinated debt promises to pay ($ 20.500 million) what equaled 9 million subordinated bonds The company currently had 100 million shares

If the risk-free rate is 5% annually compounded continuously  Determine the wealth redistributions that occur. As soon as the existing debt and shares must be traded. 

Now suppose for (b) "wealth distribution" that the firm pays dividends of $ 500 million today. What is the redistribution of wealth that occurs incrementally after distribution compared to the situation without distribution of dividends. -Consider that dividends are part of the owner's wealth

o = 0.5 annual -sigma=0.5-. o = 0.5 annual -sigma=0.5