We know the prices and payoffs for securities 1 and 2 and they are represented as follows. Cash Flow in One Year Strong Economy Security 1 2 Market Price Today $30 $65 Asset Payoffs in One Year ($) Weak Economy $7,000 Weak Economy $0 $100 The risk-free rate was calculated to be 5.2632%. Assume the probabilities of the weak economy and the strong economy are both 0.50. Suppose a company will last one year and its assets will generate payoffs in one year as follows. Complete parts a through c. Strong Economy $16,000 $100 $0 from the asset payoff and any remaining payoff from the assets would go to the company's equity holder. i. What will be the payoffs and expected payoff in one year from the bond and from the equity? The expected payoff of the bond is $ (Do not round until the final answer. Then round to the nearest dollar I ict: 2

We know the prices and payoffs for securities 1 and 2 and they are represented as follows The risk-free rate was calculated to be 5.2632%. Assume the probabilities of the weak economy and the strong economy are both 0.50 . Suppose a company will last one year and its assets will generate payoffs in one year a follows. Complete parts a through c from the asset payoff and any remaining payofif from the assets would go to the company's equity holder if What wil be the payoffis and expected payoff in one year from the bond and from the equity? The expected payoff of the bond is $ (Do not round until the final answer. Then round to the nearest dollary