Question

In your own words, explain how limited liability makes shares of common stock like an option.

a.	limited liability creates a put option that allows the owners to default by exercising the put option
	b.	limited liability creates a call option that allows the owners to default by failing to exercise the option
	c.	limited liability gives the owners the option to not fully repay the debt and give up control of the firm
	d.	limited liability gives the owners the option to declare bankruptcy
	e.	A and B
	f.	A and C
	g.	A and D
	h.	B and C
	i.	B and D
	j.	C and D
	k.	all but A
	l.	all but B
	m.	all but C
	n.	all but D
	o.	all are true

Answer 1

Solution

Option A and D