Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 16, Problem 9Q
Summary Introduction

To discuss:  The way firm’s equity will be viewed as an option and the reasons for increasing the riskiness of the firm and reasons of unhappiness of bondholders about this situation.

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Your firm’s CEO has just learned about options and how your firm’s equitycan be viewed as an option. Why might he want to increase the riskiness ofthe firm, and why might the bondholders be unhappy about this?
Why would management want to increase the riskiness of the firm?Why would this make bondholders unhappy?
As the economy goes through highs and lows, investors with stock in various companies can face significant risk, and significant benefits. How do you see the stock market affecting your own investing plans in the future? What types of risks do investors take? Do you have any companies you follow thru their stock prices?
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