In: Finance
If you consider bondholders to be the owners of a firm, then those bondholders:
Group of answer choices
own a put option on the firm with an exercise price equal to the firm’s total debt.
own a call option on the firm with an exercise price equal to the firm’s total equity.
have written a put option on the firm with an exercise price equal to the firm’s total equity.
have written a call option on the firm with an exercise price equal to the firm’s total debt.
own a put option on the firm with an exercise price equal to the firm’s total assets.
option D:
have written a call option on the firm with an exercise price equal to the firm's total debt.
---- unless the firms total debt is not increasing, the bondholders will benefit from the firm and if firms debt increases, it will cause losses for bondholders just like a call option on the sell side.