A Firm Has Assets of $21

Multiple Choice

A firm has assets of $21.8 million and a 3-year,zero-coupon,risky bonds with a total face value of $8.5 million.The bonds have a total current market value of $8.1 million.How can the shareholders of this firm change these risky bonds into risk-free bonds?

A) purchase a call option with a 1-year life and a $8.1 million face value
B) purchase a call option with a 5-year life and a $8.5 million face value
C) purchase a put option with a 1-year life and a $21.8 million face value
D) purchase a put option with a 3-year life and a $8.1 million face value
E) purchase a put option with a 3-year life and an $8.5 million face value