Use the Following Information to Answer the Question(s)below

question 13

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries is trading for $20 per share and has 25 million shares outstanding.Galt Industries has a debt-equity ratio of 0.4 and its debt is zero coupon debt with a ten-year maturity and a yield to maturity of 8%.
-Which of the following best describes Galt's debt using a put option?

• A)Long $200 million in risk-free debt and short a put option on the firm's assets with a $200 million strike price
• B)Short $200 million in risk-free debt and long a put option on the firm's assets with a $200 million strike price
• C)Long $200 million in risk-free debt and short a put option on the firm's assets with a $700 million strike price
• D)Short $200 million in risk-free debt and long a put option on the firm's assets with a $700 million strike price

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