Paying off a firm's debt is comparable to _____ on the assets of the firm.
A)purchasing a put option
B)purchasing a call option
C)exercising an in-the-money put option
D)exercising an in-the-money call option
E)selling a call option

Question

Quizplus · Accepted Answer

Exercising an in-the-money call option allows the holder to buy the underlying asset at a predetermined price, which can be compared to paying off a firm's debt as it reduces the company's financial obligations and improves its overall financial position.

Paying Off a Firm's Debt Is Comparable to _____ on the Assets