Question: Question 1 ( 2 points ) XYZ Corporation has zero - coupon debt outstanding which has a face value of $ 3 0 0 ,

Question

1 (2

points

)

XYZ Corporation has zero

-

coupon debt outstanding which has a face value of $

300,

due in five years. The market value of the firm's assets now doubles the face value of debt. The annualized standard deviation in firr values of comparable firms is

10 %

on a annual basis. The five

-

year T

-

bond rate is

5 % .

Estimate the value of equity, using an option pricing model

(

keep two decimal places

) .

Your Answer:

Answer

Question 1(2 points) XYZ Corporation has zero-coupon debt outstanding which has

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