A Share of Stock Is a ________ Option on the Assets

question 79

Multiple Choice

A share of stock is a ________ option on the assets of the firm with a strike price equal to ________.

• A) put option, face value of debt
• B) call option, market value of equity
• C) call option, face value of debt
• D) put option, market value of equity

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Definitions:

Affiliate Company

An entity that is controlled by or is under common control with another company, typically through ownership or influence.

Comparative Balance Sheet

Financial statements that present the financial position of a company at different points in time, side by side, to facilitate comparison.

Cash Flow Statement

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations, and all cash outflows that pay for business activities and investments during a given period.

Investments Account

An account that holds securities, bonds, stocks, or other financial assets in the interest of an investor.