A risky corporate bond is currently trading at $90 and is going to be worth either $100

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A risky corporate bond is currently trading at $90 and is going to be worth either $100 or $80 next year. At the same time, a zero-coupon risk-free government bond with a face value of $100 is trading at $100. Consider stock A which is going to be worth either $30 or $20 next year. What is the no-arbitrage value of stock A today?

Posted Date: May 19, 2024 11:11 AM

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A risky corporate bond is currently trading at $90 and is going to be worth either $100

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