According to the Merton model, if the face value of firmABC's bond is $70 and the value of the firm is $100. When debt matures, what are the payoffs to the bond holders and the shareholder?
B) Payoff to Bond Holders: $70, Payoff to Shareholders: $70
C) Payoff to Bond Holders: $30, Payoff to Shareholders: $30
D) Payoff to Bond Holders: $70, Payoff to Shareholders: $100
解析：The payment to debtholders = min(V, B) = min(100, 70) = 70
The payment to shareholder = max(V – B, 0) = max(100 – 70, 0) = 30
243. Savid, Inc. has an expected market value of assets in one year of $20 million.
The annual volatility of asset returns (standard deviation) for Savid has been determined to be $4.2 million. If the distance to default is 2.7, Savid's default threshold is closest to:
A) $4.2 million.
B) $6.9 million.
C) $9.43 million.
D) $8.66 million.
解析：The default threshold is calculated as:
Distance to default = ($20 million–default threshold) / $4.2 million = 2.7
Default threshold = $8.66 million