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Your company's current share price is $10. The firm has a zero-coupon bond outstanding with a 1-year maturity and a face value per share of
Your company's current share price is $10. The firm has a zero-coupon bond outstanding with a 1-year maturity and a face value per share of $10. The risk-free rate is 7% pa that is continuously compounded. The volatility of equity returns is 50% pa. You may consider the assumptions of the Merton credit risk model hold and N(d2) = 0.6272. What is the value of your companys assets per share?
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