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:

Unearned Revenue

Money received by a business for services or products yet to be delivered or provided; considered a liability until the service or product is delivered.

Utilities Expense

The cost incurred by a business for the consumption of utilities services like electricity, gas, water, and sewage.

Accounts Payable

Liability accounts representing the amounts owed by a company to its suppliers or creditors for goods and services received.

General Journal

A journal used in accounting that records all day-to-day financial transactions in chronological order.