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If we view debtholders' position in terms of options, which of the following statement is NOT true? a. Debthholders own a put option on the
If we view debtholders' position in terms of options, which of the following statement is NOT true?
a. Debthholders own a put option on the firm with exercise price equal to the amount of debt outstanding.
b. Debthholders' value increases with the value of the firm.
c. Debthholders' value decreases with the volatility of the firm.
d. Debthholders sometimes add protective covenants to the debt contract to reduce agency problem.
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