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The market value of Company XYZ ' s asset is currently $ 1 5 , 0 0 0 , 0 0 0 . The capital
The market value of Company XYZs asset is currently $ The capital structure of XYZ has two elements: debt with face value $ which matures one year from now, and common equity, with shares outstanding. Currently, the total market value of XYZs debt is $ and the market value of its equity is $
Consider a European call and a European put options on the stock of XYZ maturing a year from now. Assume that the stock of XYZ pays no dividends during the life of the options, and the strike price of the options is $ Assume that a year from now the total value of assets of XYZ can take only one of two values: $ or $To decimals
AWhat is the market value of the described call option today?
BWhat is the market value of the described put option today?
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