Use the Following Information to Answer the Question(s)below

question 21

Multiple Choice

Use the following information to answer the question(s) below.
An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks.Consider an ETF for which each share represents a portfolio of two shares of Apple Inc.(APPL) ,one share of Google (GOOG) ,and ten shares of Microsoft (MSFT) .Suppose the current stock prices of each individual stock are as shown below:
-Suppose that a security with a risk-free cash flow of $1000 one year from now trades for $930 today.If there are no arbitrage opportunities,then the current risk-free rate is closest to:

• A)6.0%.
• B)6.5%.
• C)7.0%.
• D)7.5%.

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Definitions:

Raw materials

Basic substances in their natural, modified, or semi-processed state, used as inputs for production.

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been purchased by consumers.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product.

Work In Process

Inventory items that are in the process of being manufactured but are not yet completed.