When the Interest Rate Is 5% Per Annum with Continuous

question 20

Multiple Choice

When the interest rate is 5% per annum with continuous compounding, which of the following creates a $1000 principal protected note?

• A) A one-year zero-coupon bond plus a one-year call option worth about $59
• B) A one-year zero-coupon bond plus a one-year call option worth about $49
• C) A one-year zero-coupon bond plus a one-year call option worth about $39
• D) A one-year zero-coupon bond plus a one-year call option worth about $29

---

Definitions:

Standard Deviation

A statistic that measures the dispersion or variability within a dataset, indicating how spread out the numbers are.

Setters

Positions or roles in various games or activities that involve organizing or preparing something for use, specifically referring to a key player in volleyball responsible for setting the ball for attacks.

Assists

In various contexts, this term refers to the action of helping or supporting.

Days Absent

The number of days an individual is not present at their scheduled location, often used in contexts like school or work attendance records.