Multiple Choice
A firm with assets value at $200,000 issues a 3 year zero-coupon bond with a par value of $250,000. Using a put option approach, what is the value of an insurance contract on the bond given r = .08, volatility is given as .23 and there is no dividend paid by the company?
A) $29,672
B) $31,582
C) $33,331
D) $42,195
Correct Answer:
Verified
Correct Answer:
Verified
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