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Basic Question 4 of 11

According to the option analogy, owning a company's debt is equivalent to:

A. owning a risky debt and selling a European put option.
B. owning a riskless debt and selling a European put option.
C. owning a European put option.
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I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt

Martin Rockenfeldt

Learning Outcome Statements

explain structural and reduced-form models of corporate credit risk, including assumptions, strengths, and weaknesses;

CFA® 2025 Level II Curriculum, Volume 4, Module 29.