Trumbull, Inc $\sigma$ ) of Trumbull's Total Value Is 0

question 21

Multiple Choice

Trumbull, Inc., has total value (debt plus equity) of $500 million and $200 million face value of 1-year zero coupon debt. The volatility ( $\sigma$ ) of Trumbull's total value is 0.60, and the risk-free rate is 5%. Assume that N(d1) = 0.9720 and N(d2) = 0.9050.
-What is the value (in millions) of Trumbull's equity if it is viewed as an option?

• A) $228.77
• B) $254.19
• C) $282.43
• D) $313.81
• E) $345.19

---

Definitions:

Kinesthesis

The sense of movement and body position, allowing individuals to be aware of their limbs and body parts in space without having to see them.

Audition

Audition, or hearing, is the sense and process by which sound waves are detected by the ear and transmitted to the brain for interpretation, enabling sound perception.

Smell

The sense that allows the detection of odors or scents, also known as olfaction.

Pain Gate

An idea positing that there exists a "gate" within the spinal cord that can either obstruct pain signals or let them proceed to the brain, functioning on a neurological level.