Assume your company shows the market values of equity and debt at the level of $175373 and $224626, respectively. The rate of return on assets is 33 percent and its volatility is 45 percent. The company is financed by a loan that matures in 3 years and shows the face value of $330000. 

What is the probability of default of your company if a T-bill yields 6 percent at the market?

Answer rating: 100% (QA)

We may use the Merton model which is a frequently used model for calculating the chance of default f... View the full answer