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You are given the following information about firm A:
Market value of asset at time 0 = 1000
Market value of asset at time 1 = 1200
Short-term debt = 500
Long-term debt = 300
Annualized asset volatility = 10%
According to KMV model, what are the default point and the distance to default at time 1?
A
800 | 3.33
B
650 | 7.50
C
650 | 4.58
D
500 | 5.83