The value of a company's equity is $2 million and the volatility of its equity is 50%.
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The value of a company's equity is $2 million and the volatility of its equity is 50%. The debt that will have to be repaid in one year is $5 million. The risk‐free interest rate is 4% per annum. Use Merton's model to estimate the probability of default.
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In this case E 2 GE 050 D 5 ...View the full answer
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