3 ms·
This is clearly not true, because if any company can find a market for their bonds, no company would ever need to go bankrupt. Puts would be prohibitively expe
by evandijk70 7y ago
This is clearly not true, because if any company can find a market for their bonds, no company would ever need to go bankrupt.
Puts would be prohibitively expensive if the company is likely to go bankrupt.
- ThrustVectoring 7y agoThere's a market, there's not a market of unlimited size (or even one large enough to make a meaningful difference to solvency). As one upper limit, if you borrow literally every publicly available share and sell it short, that limits you to hedging bonds up to the total market capitalization of the company.