Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. consider a corporation with a market value of $100

Consider a corporation with a market value of $100 million. The form has a zero- coupon...

90.2K

Verified Solution

Question

Finance

Consider a corporation with a marketvalue of $100 million. The form has a zero- coupon bond with anaggregate Face value of $100 million due in one year. Thevolatility of the rate of return on the firm is 30% per year andthe risk-free rate is 5% per year. What is the aggregate marketvalue of this bond?

A. 79.17 million

B. 69.25 million

C. 98.01 million

D. 85.77 million

E. None of the above

Answer & Explanation Solved by verified expert
4.2 Ratings (737 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Consider a corporation with a marketvalue of $100 million. The form has a zero- coupon bond with anaggregate Face value of $100 million due in one year. Thevolatility of the rate of return on the firm is 30% per year andthe risk-free rate is 5% per year. What is the aggregate marketvalue of this bond?A. 79.17 millionB. 69.25 millionC. 98.01 millionD. 85.77 millionE. None of the above

Other questions asked by students

Q

A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years...

Finance
Q

The Sales Manager at City Real Estate Company is interested in describing the relationship between condo...

Statistics
Q

Problem 3. An isometry between inner-product spaces V and W is a linear operator L in B...

Advance Math
Q

The question can be answered in a variety of ways. You are encouraged (and in some...

Biology
Q

1. Identify the three basic types of sheet metalworking operations. 2. In blanking of a round...

Mechanical Engineering
Q

1 Use the legend to indicate which formula would be required to solve for the...

Basic Math
Q

The angle of depression from the top of a tower to a boulder on the...

Basic Math
Q

Physical measure allocation and sell or process further Oregon Forests uses a joint process...

Accounting
Q

Matt and Joel are equal partners in the MJ Partnership. For the current year ended...

Accounting
Q

Place the general sequence of steps of the audit process (shown below) in the correct...

Accounting
Q

Gary Smith and Debra Williams are examining the following summary of cash flows for Pronghorn...

Accounting
Q

1. Forward Foreign Exchange: Yen/Us dollar and Forward exchange rate 3month = 110 $....

Finance