Sometimes, options are used to value risky corporate debt. Because of the limited liability of stockholders, money borrowed by the firm is backed, at most, by the total value of the firm’s assets. One way to view this agreement is to consider that stockholders have sold the entire firm to debt holders but hold a call option with an exercise price equal to the face value of the debt. In this case, if the value of the firm exceeds the value of the debt, stockholders exercise the call option by paying off the bondholders. If the value of the firm is less than the value of the debt, shareholders do not exercise the call option, and all assets are distributed to the bondholders.