How would i solve part 2 in excel - The value of a company's equity is $5 million and the volatility of the equity is 80%. The debt that has to be paid in 5 years is $15 million. The risk-free interest rate is 5% per annum. 1. What is the difference between risk-neutral versus real-world probabilities? When should you use each of them? 2. Use Merton's model to estimate the probability of a default on the debt in the next 5 years. 3. What is the market value of debt? what is the debt's expected loss from default? Question 2 (10 points) Consider following transactions with the same counterparty 1. 6 year foreign exchange forward (a) Principal 800 1