Exhibit 20.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 62

Multiple Choice

Exhibit 20.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
December futures on the S&P 500 stock index trade at 250 times the index value of 1187.70. Your broker requires an initial margin of 10% percent on futures contracts. The current value of the S&P 500 stock index is 1178.
-Refer to Exhibit 20.1. Calculate the return on a cash investment in the S&P 500 stock index if the ending index value is 1170 over the same time period.

• A)1.87%
• B)-0.68%
• C)-14.90%
• D)10.36%
• E)None of the above

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Definitions:

Cotton Economy

An economic system heavily reliant on the production, trade, and processing of cotton, particularly significant in the Southern United States before the Civil War.

Southern Code Of Honor

A set of traditional beliefs in the Southern United States emphasizing personal reputation, bravery, and respectability.

Intellectual Equal

A person who shares a similar level of knowledge, understanding, or mental capacity with another individual.

Significant Slave Systems

Describes historical systems where slavery played a critical role in economic and social structures.