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Which of the following statement is wrong? A. Debt can be viewed as a portfolio of riskfree debt and a long position in a put

Which of the following statement is wrong?

A.
Debt can be viewed as a portfolio of riskfree debt and a long position in a put option on the firm cash flow with strike price being the face value of the debt.

B.
Equity can be viewed as a call option on the assets of the firm with a strike price equal to the value of debt outstanding.

C.
The debt holders can be viewed as owning the firms assets and having sold a call option with a strike price equal to the face value of the debt

D.
Option valuations can be used to estimate the magnitude of agency cost problem within the firm.

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Previous Question Next Question

	A.	Debt can be viewed as a portfolio of riskfree debt and a long position in a put option on the firm cash flow with strike price being the face value of the debt.
	B.	Equity can be viewed as a call option on the assets of the firm with a strike price equal to the value of debt outstanding.
	C.	The debt holders can be viewed as owning the firms assets and having sold a call option with a strike price equal to the face value of the debt
	D.	Option valuations can be used to estimate the magnitude of agency cost problem within the firm.