Given a Stock Index with a Value of $1,200, an Anticipated

question 20

Multiple Choice

Given a stock index with a value of $1,200, an anticipated dividend of $45, and a risk-free rate of 6%, what should be the value of one futures contract on the index?

• A) $1,227.00
• B) $1,070.00
• C) $993.40
• D) $995.09
• E) $1,000.00

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Definitions:

Intermediate Products

Goods that are used as inputs in the production of other goods, not intended for final consumption.

Profit Center

A branch or division of a company that is directly responsible for generating its own revenue and profits.

Division Profit

This refers to the net income generated by a specific division or segment of a larger company.

Company-wide Profit

represents the total earnings of a company after all expenses and taxes have been deducted from revenue, reflecting the overall financial performance across all departments and activities.