Delta Importers Has a Pure Discount Loan with a Face

question 48

Multiple Choice

Delta Importers has a pure discount loan with a face value of $180,000 due in one year. The assets of the firm are currently worth $215,000. The shareholders in this firm basically own a ________ option on the assets of the firm with a strike price of ________.

• A) put; $180,000
• B) put; $265,000
• C) warrant; $265,000
• D) call; $180,000
• E) call; $265,000

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Definitions:

Paraphyletic Clade

A group of organisms that includes an ancestral species and some, but not all, of its descendants.

Tetrapods

Vertebrate animals with four limbs, or descent from such organisms, including amphibians, reptiles, mammals, and birds.

Lobe-Finned Fish

A group of fish characterized by fleshy, lobed, paired fins, which are precursors to the limbs of land vertebrates.

Wrist Bones

The small bones that make up the human wrist, contributing to its complex range of motion and dexterity.