Obama Might Allow GM to go Bankrupt
Great news. It would be nice to actually see a big company fail. Currently, GM bonds trade at an average price of 18 cents on the dollar. This would not shock financial markets. Anyone lending to them already has taken a big hit. The stock trades at a value of $1.7B, on $91B in assets--option value. Implied vols are around 220%, the short rebate is about -87% (you pay 87% annually on the proceeds generated from a short sale).
Thus, it's already dead. Bankruptcy would not 'disrupt' the firm, it would clarify the situation.
Thus, it's already dead. Bankruptcy would not 'disrupt' the firm, it would clarify the situation.
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