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Nuance Communications stock is trading for $10 per share. It has 10 million shares outstanding and a market debt-equity ratio of 1. Its debt is
Nuance Communications stock is trading for $10 per share. It has 10 million shares outstanding and a market debt-equity ratio of 1. Its debt is zero-coupon debt with a 10-year maturity and a yield to maturity of 10%.
a. Describe Nuances equity as a call option
b. What is the maturity of the call option?
c. What is the market value of the asset underlying this call option?
d. What is the strike price of this call option?
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