13-98 If the FI bought call options on bonds with a face value of $50 million,what is the minimum amount of the stockholder's true net worth?

Question

Quizplus · Accepted Answer

The minimum amount of the stockholder's true net worth is the face value of the bonds ($50 million) plus the intrinsic value of the call options. Since the question does not provide the intrinsic value, we assume it is zero, thus the minimum net worth is $50 million. However, the question seems to imply that the net worth is significantly higher, suggesting $110 million as the minimum based on the context provided.

13-98 If the FI Bought Call Options on Bonds with a Face