42.
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A firm has assets of $21.8 million and a 3-year, zero-coupon, risky bonds with a total face value of $8.5 million. The bonds have a total current market value of $8.1 million. How can the shareholders of this firm change these risky bonds into risk-free bonds?
A.
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purchase a call option with a 1-year life and a $8.1 million face value
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B.
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purchase a call option with a 5-year life and a $8.5 million face value
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C.
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purchase a put option with a 1-year life and a $21.8 million face value
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D.
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purchase a put option with a 3-year life and a $8.1 million face value
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E.
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purchase a put option with a 3-year life and an $8.5 million face value
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Refer to section 25.4
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