Question
The assets of ZYX Tools may, in one year, have a value of 100 million or 200 million. The probability that their value will be
The assets of ZYX Tools may, in one year, have a value of 100 million or 200 million.
The probability that their value will be 100 million is 0.2 and the probability that their
value will be 200 million is 0.8. Beta for the debt of ZYX Tools is 0.
ZYX has 150 million of zero-coupon bonds maturing in one year outstanding. The
annual effective risk-free interest rate is 0.04.
Calculate the value of those bonds
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Introductory Econometrics For Finance
Authors: Chris Brooks
4th Edition
110843682X, 9781108436823
