Question: PLEASE ANSWER THIS QUESTION QUICKLY Question 7 [4 marks]. The following facts about a company are known: 1. It has issued zero-coupon bonds with the
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Question 7 [4 marks]. The following facts about a company are known: 1. It has issued zero-coupon bonds with the total nominal value of \\( 15 \\) million maturing in 4 years' time. 2. The total value of the shares of this company is \\( 17.3 \\) million. 3. The total capital \\( F(t) \\) of the company follows the geometric Brownian motion with parameters \\( \\mu=0.15 \\) and \\( \\sigma=0.2 \\). The continuously compounded annual interest rate =6. The total value \\( F(0) \\) of the company at time \\( t=0 \\) is not known. Within the framework of the Merton model, write down the equation which allows one to find \\( F(0) \\). Remark. You are not supposed to compute \\( F(0) \\)
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