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A financial firm has short-term liabilities of $700, long-term liabilities of $1,000, and assets of $2,000. The standard deviation of asset returns is $200. Compute the distance to default (DD) using the KMV model. (Note: All numbers in $million) A. 4.5. B. 4.0. C. 5.8. D. 6.5. |
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