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

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

A. 79.17 million

B. 69.25 million

C. 98.01 million

D. 85.77 million

E. None of the above

Expert Solution

jeff jeffy answered 1 year ago

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