Question 2 (a) Compare and contrast the option trades undertaken by Microsoft and Pemex respectively [4096] (b) Explain how the equity issued by a firm can be regarded as a call option. [20%] (c) An unlisted firm is valued every three months. Its current valuation is 23.6million. The variance of the value of the underlying assets has been estimated to be 0.15 on an annualized basis. The firm has debt of 20million, payable in six months. Three month Treasury bills currently yield 2%. Estimate the value of the firm's equity. [4096] Question 2 (a) Compare and contrast the option trades undertaken by Microsoft and Pemex respectively [4096] (b) Explain how the equity issued by a firm can be regarded as a call option. [20%] (c) An unlisted firm is valued every three months. Its current valuation is 23.6million. The variance of the value of the underlying assets has been estimated to be 0.15 on an annualized basis. The firm has debt of 20million, payable in six months. Three month Treasury bills currently yield 2%. Estimate the value of the firm's equity. [4096]