Given a Stock Index with a Value of $1,500, an Anticipated

question 19

Multiple Choice

Given a stock index with a value of $1,500, an anticipated dividend of $62 and a risk-free rate of 5.75%, what should be the value of one futures contract on the index?

• A) $1,343.40
• B) $62.00
• C) $1,418.44
• D) $1,524.25

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Definitions:

Daily Closing Balance

The amount of money in an account at the end of each business day, after all transactions have been accounted for.

GICs

Guaranteed Investment Certificates are a form of investment in Canada that ensures a fixed rate of return for a specific duration.

Simple Interest

Interest calculated on the principal amount of a loan or deposit, not including any previously earned interest.

Financial Position

Represents the net worth of an entity, detailing assets, liabilities, and shareholders' equity at a specific point in time.