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MOST IMPORTANT: Need help with D-E also if you can, is my A-C correct? a. Colosseum Corp. has a zero coupon bond that matures in

MOST IMPORTANT: Need help with D-E
also if you can, is my A-C correct? image text in transcribed
a. Colosseum Corp. has a zero coupon bond that matures in five years with a face value of $76,000. The current value of the company's assets is $72,000, and the standard deviation of its return on assets is 35 percent per year. The risk-free rate is 6 percent per year, compounded continuously. What is the value of a risk-free bond with the same face value and maturity as the current bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the value of a put option on the firm's assets with a strike price equal to the face value of the debt? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) C-1. Using the answers from (a) and (b), what is the value of the firm's debt? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c-2. What is the continuously compounded yield on the company's debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d-1. Assume the company can restructure its assets so that the standard deviation of its return on assets increases to 44 percent per year. What happens to the value of the debt? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d-2. What is the new continuously compounded yield on the debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) e-1. If the company restructures its assets, how much will bondholders gain or lose? (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) e-2. If the company restructures its assets, how much will stockholders gain or lose? (A loss amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) $ $ 57,000.00 4,000.00 61,000.00 0.01% $ a. Value of risk-free bond b. Price of put option c-1. Value of firm's debt c-2 Return on debt d-1. Value of firm's debt d. 2. Return on debt e-1. Bondholders' gain loss e-2. Stockholders' gain/loss %

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