Use the Following Information and the Option Valuation Model for the Next

question 88

Multiple Choice

Use the following information and the option valuation model for the next two problems. Onyx Corporation has a $200,000 loan that will mature in one year. The risk free interest rate is 6 percent. The standard deviation in the rate of change in the underlying asset's value is 12 percent, and the leverage ratio for Onyx is 0.8 (80 percent) . The value for N(h1) is 0.02743, and the value for N(h2) is 0.96406. What is the current market value of the loan?

• A)$160,000.
• B)$189,932.
• C)$200,000.
• D)$188,352.
• E)$178,571.

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Definitions:

Chronosystem

A layer within Bronfenbrenner's ecological theory representing the dimension of time and its influence on a child's development.

Exosystem

A component of Bronfenbrenner's ecological systems theory, referring to external environments that indirectly influence the individual, such as parents' workplaces or the neighborhood's social conditions.

Chronosystem

In ecological systems theory, it refers to the patterning of environmental events and transitions over the life course, as well as socio-historical circumstances that affect an individual's development.

Environmental Events

Occurrences within the natural or built environment that can influence individuals' behaviors, health, and development.