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Arbitrage argument of mm and it's formlula |
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Answer» The MM arbitrage ARGUMENT states that the market value of the unleveraged COMPANY, S U (the PRICE of the U‐share), must be equal to the value of the leveraged company, which is the market value of equity ( S L , the price of the L‐share) PLUS the value of the DEBT, D: V U = S U = S L + D = V L . |
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