Question $1(1$ point$)$

Which of the following statements is correct?

The value of the risky debt increases if the volatility of the firm increases.

The value of the risky debt increases if the volatility of the firm increases.

The equity of a firm with risky debt can be viewed as a put option on the value of the firm

The equity of a firm with risky debt can be viewed as a call option on the value of the firm with an exercise price equal to the face value of the debt.

The risky debt of a firm can be viewed as a call option on the value of the firm with an exercise price equal to the face value of the debt.Question $1(1$ point$)$

Which of the following statements is correct?

The value of the risky debt increases if the volatility of the firm increases.

The value of the risky debt increases if the volatility of the firm increases.

The equity of a firm with risky debt can be viewed as a put option on the value of the firm

The equity of a firm with risky debt can be viewed as a call option on the value of the firm with an exercise price equal to the face value of the debt.

The risky debt of a firm can be viewed as a call option on the value of the firm with an exercise price equal to the face value of the debt.