What is the expected return on equity using the Black-Scholes formula, given a zero-coupon bond that pays $250 at maturity in 4 years? Assume assets are worth $200, r = 0.05, ? = 0.30, and no dividend is paid. The return on assets is 11.5%
A)
10.27%
B)
14.27%
C)
18.27%
D)
22.27%
Answer:
D
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