1. According to the stakeholder theory of capital structure, would someone prefer to work for a high-debt or low-debt firm? Explainwhy.
2. In what case will using dividends expected to be paid to shareholders yield the same valuation for the firm as using free cash flows expected to be generated by the firm?
3. Apply put-call parity to compare the ν, Γ, ρ and Θ of a European put and a European call on the same asset with the same strike and expiration. Note that this holds without assuming the log-normal model for the asset, that is, the Black-Scholes formula for the options.