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Jessie,Inc

Question 16

Multiple Choice

Jessie,Inc.has 4-year zero-coupon bonds outstanding,which will pay $1,000 at maturity.The assets are valued at $900,σ = 0.25,r = 0.045,and the company does not pay a dividend.Using a Black-Scholes model,what is the yield on debt?


A) 4.68%
B) 6.48%
C) 8.46%
D) 8.64%

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