Suppose that you are the manager and the sole owner of a highly leveraged company. All the debt will mature in one year.

5. Suppose that you are the manager and the sole ownerof a highly leveraged company. All the debt will maturein one year. If at that time the value of the company isgreater than the face value of the debt, you will pay o¤the debt. If the value of the company is less than theface value of the debt, you will declare bankruptcy andthe debtholders will own the company.(a) Express your position as an option on the value of thecompany(b) Express the position of the debtholders in terms ofoptions on the value of the company