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Face value and maturity as the current bond

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Reference no: EM131569254

B Corp has a zero coupon bond that matures in 5 years with a face value of $60,000. The current value of the firm's assets is $57,000 and the standard deviation of its return is 50 % per year. The risk free rate is 6 % per year compounded continuously.

A) What is the value of a risk-free bond with the same face value and maturity as the current bond?

B) What is the value of a put option on the firm's assets with a strike price equal to the face value of debt?

C) What is the value of the firm's debt?

Reference no: EM131569254

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