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Tescacs assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to be repaid at the end of two years. The
Tescacs assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to
be repaid at the end of two years. The risk-free interest rate is 5%, and the standard deviation
of the returns on Tescacs assets is 40% per year.
A. What is the value of the put option owned by shareholders?
B. What is the value of the companys debt?
C. What is the value of the companys equity?
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Introduction To Derivatives And Risk Management
Authors: Robert Brooks, Don M Chance
9th Edition
1133190197, 978-1133190196
