11-89 What does the KMV model use as equivalent to holding a call option on the assets of the firm?

Name: 11-89 What does the KMV model use as equivalent to holding a call option on the assets of the firm?
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The KMV model uses the value of equity in a firm as equivalent to holding a call option on the assets of the firm. This is because the value of equity reflects the residual claim on a firm's assets after all other liabilities have been paid, similar to the payoff of a call option.

11-89 What Does the KMV Model Use as Equivalent to Holding