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Given the following: Stock equals 100 Stock volatility of 40% Debt maturity of 5 years Debt Face value of 150 Risk-free rate of 3% Use

Given the following: Stock equals 100 Stock volatility of 40% Debt maturity of 5 years Debt Face value of 150 Risk-free rate of 3% Use Mertons model to find the asset value and asset volatility? What is the risk-neutral probability of default over the debts maturity and the annualized default probability? What is the market spread for the debt? What is the implied Recovery Rate?

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