It is said that the equityholders of a levered firm can be thought of as holding a

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It is said that the equityholders of a levered firm can be thought of as holding a call option on the firm’s assets. Explain what is meant by this statement.

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Corporate Finance

ISBN: 978-0077861759

10th edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Question Posted: Aug 28, 2014 10:28 AM

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It is said that the equityholders of a levered firm can be thought of as holding a

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The equityholders of a firm financed partially with debt can be thought of as holding a call option ...View the full answer

Corporate Finance

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