volatility of equity

1. Suppose there is a single 5-year zero-coupon debt issue with a maturity value of $120. The expected return on assets is 12%. What is the expected return on equity? The volatility of equity? What happens to the expected return on equity as you vary A, s, and r?
2. Repeat the previous problem for debt instead of equity.

READ ALSO :   Pertinent readings: Dahl, Olson, Key, Greenberg chapters 8,9,10.