Question: Suppose there is a single 5-year zero-coupon debt issue with a maturity value of $120. The expected return on assets is 12%. What is the

Suppose there is a single 5-year zero-coupon debt issue with a maturity value of $120. The expected return on assets is 12%. What is the expected return on equity? The volatility of equity? What happens to the expected return on equity as you vary A, σ, and r?

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