Bank Monash quotes the interest rate on loans as 7% per annum continuously compounded. The interest is paid quarterly on a $7792 loan. What is the interest payment (in $) of this loan per quarterly? 

An investor has two choices to invest $5000. First, the investor can deposit $5000 in the bank for one year. The interest rate is 10% per annum continuously compounded. Second, the investor can buy European call options on the stock with a strike price of 45 for $5 per option. These options will be expired in 1 year. At option maturity, what is the stock price to make the second choice to give the same outcome as the first choice?

Answer rating: 100% (QA)

Bank Monash To calculate the quarterly interest payment we can use the following formula ... View the full answer