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

question 15

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 call option?

• A)Long $700 million in the firm's assets and short a call option with a $700 million strike price
• B)Short $700 million in the firm's assets and long a call option with a $700 million strike price
• C)Long $700 million in the firm's assets and short a call option with a $200 million strike price
• D)Short $700 million in the firm's assets and song a call option with a $200 million strike price

---

Definitions:

Consumption Point

A specific point on a consumer’s budget constraint that shows the combination of different goods or services they will consume to maximize utility.

Wheat

A cereal grain considered a staple food in many parts of the world, used to make products like bread, pasta, and cereal, among others.

Cattle

Domesticated large animals raised in agriculture for purposes like meat (beef), milk, or hide production.

Crude Oil

A natural petroleum product that’s extracted from the ground and is a global primary energy source, undergoing refinement for various uses.