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What is the value of the put option owned by shareholders

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Reference no: EM132768354

Question - Tescac's assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to be repaid at the end of two years. The risk-free interest rate is 5%, and the standard deviation of the returns on Tescac's assets is 40% per year.

A. What is the value of the put option owned by shareholders?

B. What is the value of the company's debt?

C. What is the value of the company's equity?

Reference no: EM132768354

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