11-46 The payoff function of a loan to a debt holder is similar to writing a call option on the value of the borrower's assets with the face value of the debt as the exercise price.

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The payoff function of a loan to a debt holder is similar to holding a bond, not writing a call option. Writing a call option would imply the debt holder benefits from the borrower's asset value exceeding the debt, which is not the case.

11-46 the Payoff Function of a Loan to a Debt