medium · Private Credit & Debt underwriting-credit-analysis
Under the Merton Model of credit risk, which of the following best describes the structural view of a firm's equity?
- A put option on the firm's assets held by the creditors.
- A senior claim that receives dividends before interest is paid to lenders.
- A risk-free asset combined with a long position in a credit default swap.
- A call option on the firm's assets with a strike price equal to the face value of debt.
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