Question: 1. (10 points) 1 Explain how a firm's equity can be compared to a call option. 2 How does this help explain why managers may

1. (10 points) 1 Explain how a firm's equity can be

1. (10 points) 1 Explain how a firm's equity can be compared to a call option. 2 How does this help explain why managers may select riskier projects at the expense of bondholders? (5 points) (1) Explain how one creates a long straddle. 2 What strategy is being used

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