Given a Stock Index with a Value of $1,100, an Anticipated

question 2

Multiple Choice

Given a stock index with a value of $1,100, an anticipated dividend of $27, and a risk-free rate of 3%, what should be the value of one futures contract on the index?

• A) $943.40
• B) $970.00
• C) $913.40
• D) $1,106.00
• E) $1,000.00

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Definitions:

Reality Principle

A psychoanalytic concept where the ego tries to meet the needs of the id in a realistic manner, considering societal norms and consequences.

Classical Conditioning

The process of learning where a response initially elicited by a second stimulus is eventually elicited by the first stimulus alone due to their continuous pairing.

Phobias

An intense, irrational fear of specific objects, activities, or situations that leads to avoidance behavior.

B.F. Skinner

B.F. Skinner was an American psychologist and behaviorist known for his work in developing the theory of operant conditioning, which explains learning as a process of behavior modification through positive and negative reinforcements.