Estimates the current asset value of peepswurk

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PeepsWurk has a single zero coupon bond outstanding with face value of $10 billion due one year from now. The current yield on the bond is 10% (with continuous-compounding). Your quant team estimates the current asset value of PeepsWurk as being $13 billion. Assuming the risk-free rate is 4%, what asset volatility would be consistent with the pricing you are seeing in the debtmarkets?

Reference no: EM133119577

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