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:

Discrimination

The unfair or prejudicial treatment of individuals based on personal characteristics, such as race, gender, or age.

Auto Repair

The act of fixing or servicing vehicles to ensure they operate correctly, often performed by mechanics in garages or workshops.

Employer Discrimination

The unfair treatment of employees or job applicants based on personal characteristics, such as race, age, or gender, rather than job qualifications.

Competitive Markets

Markets characterized by many buyers and sellers, where no single entity can control prices, and products are relatively homogeneous.