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PtichkaEL [24]
2 years ago
8

Higgs Bassoon Corporation is a custom manufacturer of bassoons and other wind instruments. Its current value of operations, whic

h is also its value of debt plus equity, is estimated to be $200 million. Higgs has $110 million face value, zero coupon debt that is due in 3 years. The risk-free rate is 5%, and the standard deviation of returns for similar companies is 60%. The owners of Higgs Bassoon view their equity investment as an option and would like to know the value of their investment.
Required:
Using the Black-Scholes Option Pricing Model, how much is the equity worth?

Business
1 answer:
Gnom [1K]2 years ago
5 0

Answer:

123.63 million

Explanation:

From the given information:

The total value for the firm is $200 million

The face value of debt is $110 million

Maturity of debt = 3 years

Risk free rate = 5 %

Standard deviation of return = 60%

Using Black-Scholes Option Pricing Model, the equity worth is computed in an Excel file and the screenshot is show in the image attached below.

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Which type of layout features departments or other functional groupings in which similar activities are performed
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Answer:

Process-oriented.

Explanation:

A functional (departmental) organizational structure is a type of structure used to organize staffs by dividing them into various departments based on their skill set, roles or functions and knowledge.

These departments which are vertically structured may include, finance, IT, sales and marketing, research and development, customer service etc. Also, the various departments are headed by a functional manager who are saddled with the responsibility of overseeing, managing and reporting to the executive management.

Similarly, a type of layout in the manufacturing process that features departments or other functional groupings in which similar activities are performed is generally referred to as being process-oriented.

One of the main advantages of a process-oriented layout is that it mitigates or reduces difficulties associated with material flow variability for a product.

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1 year ago
The genius of public corporations stems from their capacity to allow efficient sharing or spreading of risk among many investors
olga nikolaevna [1]

Answer:

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Explanation:

The legal representative of the bondholders is a mandatory figure in the issuance of bonds traded in the stock market. The legal representative of the bondholders has the primary function of performing the necessary acts for the exercise of the rights and the defense of the interests of the holders. Its activity is regulated, which includes a series of duties of management, defense, communication and conservation of mandatory compliance. In addition, he acts as spokesperson for the bondholders before the issuer, the Financial Superintendence of and third parties.

The legal representative of the bondholders will respond up to a slight fault in the fulfillment of their obligations.

5 0
1 year ago
A server should check with a manager before accepting which type of id
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When accepting out-of-state study, the institution is required to ask for additional information such as recent photos and document issuance date.
Since this type of ID make everything become complicated, a lot of individual establishments choose not to accept this type of ID.
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Ksju [112]

Answer:

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The major challenge of this is that , the rate competition has increased between countries that have great impacts on the resource area of businesses.

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1 year ago
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I believe your answer is B
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