1. Suppose that the 3-year risk-free interest rate is 4% with continuous compounding. You are a bank offering a client a princlpal-protected note. The 3-year risk-free bond is on a principal (face/par value) of $1,000. The client has $1,000 to invest. You plan to use a 3-year call option on a stock portfolio worth $1,000 that does not pay any dividends. The portfolio volatility is 30%. a) What is the price of the risk-free bond today? b) How much is the difference between the face value of $1,000 and the price of the bond? c) Use the option-pricing calculator to determine the call option price if the exercise price is 1,000 d) Do you have enough to buy the option if its exercise price is 1,000 ? e) Assume you, the bank, want to keep a commission of $20 on the sale of this princlpal-protected note. What is the lowest exercise price that will allow you to achieve the transaction? (exercise prices must be "round numbers" ending elther in 0 or 5) \begin{tabular}{|l|l|} \hline Output Data \\ Value of the Call Option: \\ \hline \end{tabular}