given their type of liquidity constraint, the firm should buy call options at t 0. However, their model is based on the assumption that there is a liquidity constraint at t 1 but no such constraint at t 0.
given their type of liquidity constraint, the firm should buy call options at t 0.However, their model is based on the assumption that there is a liquidityconstraint at t 1 but no such constraint at t 0.