Exercise price equal to the face value of the debt

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Reference no: EM13729318

When a firm has risky debt, its equity can be viewed as an option on the total value of the firm with an exercise price equal to the face value of the debt.

Reference no: EM13729318

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Exercise price equal to the face value of the debt : When a firm has risky debt, its equity can be viewed as an option on the total value of the firm with an exercise price equal to the face value of the debt.
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