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:

Warranty Deed

A document in real estate transactions that guarantees a property is free from liens or claims and assures the buyer of clear title.

Security Interest

A lien or legal claim on assets that have been offered as security to ensure the repayment of borrowed money.

Real Property

Land and anything permanently affixed to it, such as buildings and improvements; distinguished from personal property.

Fair Housing Act

The Fair Housing Act is a federal law that prohibits discrimination in the buying, selling, renting, or financing of housing based on race, religion, national origin, sex, disability, or familial status.