The Current Level of Standard and Poor's Index Is 950

question 31

Multiple Choice

The current level of Standard and Poor's index is 950. The prospective dividend yield is
3%, and the interest rate is 5%. What is the value of a one-year futures contract on the index? (Assume all dividend payments occur at the end of the year.)

• A) 969
• B) 997.5
• C) 978.5
• D) None of the above

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Definitions:

Full-Capacity Level

The maximum level of output a company can produce and sell with its current resources and without incurring significant additional costs.

Operating Capacity

The maximum amount of work that an organization can complete in a given period under normal circumstances.

Sales

The total amount of goods or services sold by a company during a specific period, often seen as a critical measure of business performance.

External Financing

External financing encompasses funds raised by a business from outside sources, such as loans, bonds, or equity financing, as opposed to internal sources like retained earnings.