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A bank decides to create a seven-year principal-protected note on the stock market. The risk-free rate is 5.50%, the fair market spread on the bond

A bank decides to create a seven-year principal-protected note on the stock market. The risk-free rate is 5.50%, the fair market spread on the bond is 1.00%, and the stock market price volatility is 18%; furthermore, the dividend yield of the market is expected to be 2.0%. For each $1,000 bond, how much does the bank earn?

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