Question: Upside Down has a zero coupon bond issue outstanding with a $10,000 face value that matures in one year. The current market value of the

Upside Down has a zero coupon bond issue outstanding with a $10,000 face value that matures in one year. The current market value of the firm's assets is $12,400 while the standard deviation of the returns on those assets is 22 percent annually. The annual risk-free rate is 4.6 percent, compounded continuously. What is the market value of the firm's debt based on the Black-Scholes model?

$8,415

$9,311

$8,962

$8,900

$9,413

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