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

question 10

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 with a $200 strike price
• B) Short $200 million in risk free debt and Long a put option with a $200 strike price
• C) Long $200 million in risk free debt and Short a put option with a $700 strike price
• D) Short $200 million in risk free debt and Long a put option with a $700 strike price

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