I am looking for the Reading # that talks about the equivalance between a bond a short put written by bondholders for stockholders. Thank you.
Corporate Governance I think.
reading 39 - study session 14, Risk Management, “… the stock of a company with leverage can be viewed as a call option on its assets … a bond with credit risk can be viewed as a default-free bond plus an implicit short put option written by the bondholders for the stockholders.” Vol 5 p 251
DoubleDip Wrote: ------------------------------------------------------- >> "… the stock of a company with leverage can be > viewed as a call option on its assets … Long or short a call on its assets ?