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1. The following quantities for a company are given: V0 = 100, σ = 40%, LR = 60% T = 1 ár r = ln(1 + 5%). Use the Merton model to answer the following questions 1. What is the total debt of the company, F? 2. What is the expected asset value a year from now, VT? 3. Given that the company will default a year from now, what is the expected recovery rate? 4. What is the price of a hedge against the company default?
2. A bank lends company $ 100m to buy $ 150m of shares in American Airlines (AMR). The company pays the difference between the acquisition price and the loan that the bank provides. It is the only purpose of the company involved in the AMR transaction to own the shares and it has no other assets.
The loan is a bullet loan for two years and risk free rates are 5%. What interest rate should the bank charge the company according to the Merton model?
3. Premium on a CDS is 60bp per year with semiannual payments (twice a year). The notional amount of the contract is $ 300 mn and insurance is paid in cash. Default occurs after 4 years and two months and at that time the value of the underlying bond is estimated to be 40% of the notional. Show cashflow an their timing as they look from the seller of the CDS Agreement.
Amount of space devoted to them, but each plays the important role. Explain the role of each of these characters relative to overall plot.
What is the difference between intentional and unintentional communication?
Suppose you were living on a fictitious planet Myrmidon, and you wanted to measure its size. The sun is shining directly down a well 1000 kilometers to your south, while at your location the sun is 30 degrees from overhead. What is the circumfrence o..
Step 3: (600 words; use two academic sources - one from your textbook + one from the eModule) ?Next, identify and cite one of the readings, articles or videos from the eModule and discuss how this resource helps you to expand and deepen your original..
Provide an example of a Classical and a Contemporary ideology that you personally feel is viable. Why should the United States in 2011 begin to move toward these approaches?
Administrative controls form an important part of security, and although most of us don’t like paperwork, that is a large part of this security control.
Should active training and professional development be a part of a job description? How do job requirements differ from a job description?
(The Strange Case of Matthew Buford)Discuss the behavior of the rescue team and do you think that groupthink as discussed in the Janis article was operating here, why or why not?
Has the introduction of CGI effects enhanced the quality of film making or are the films of the past essentially better than today's? Make answer as brief as possible.
What strategies would a tourism destination use to meet the demands of the new ecotourism trend?
Law enforcement agencies exist on federal, state, and local levels. What is jurisdiction? Describe the difference between federal and local police jurisdiction.
You suggest the media could help by decreasing the use of stereotypes, but would that point out to people they are holding these stereotypes?
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