Explain the rationale behind the idea that equity is a call option on a firm's assets. In other words, explain why equity ownership of a
Explain the rationale behind the idea that equity is a call option on a firm's assets. In other words, explain why equity ownership of a firm is equivalent to owning a call option on the firms assets. Next, explain what it would mean for shareholders to allow this call option to expire, and under what circumstances shareholders would do so.
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Authors: Paula H. Song, Kristin L. Reiter
3rd Edition
1567939759, 978-1567939750
