Shire plc has a zero coupon bond issue outstanding with 12 billion face value that matures in
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Shire plc has a zero coupon bond issue outstanding with £12 billion face value that matures in 5 years. The current market value of the firm’s assets is £20 billion.
The standard deviation of the return on the firm’s assets is 23 per cent per year, and the annual risk-free rate is 3 per cent per year, compounded continuously. Based on the Black–Scholes model, what is the market value of the firm’s equity and debt?
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Determining Market Value of Equity and Debt using BlackScholes While the BlackScholes model is typic...View the full answer
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Related Book For
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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