The Spot Rate on a Non-Dividend-Paying Stock Is $15

question 76

Multiple Choice

The spot rate on a non-dividend-paying stock is $15.70. The risk-free rate is 3.15% and the market rate is 10.75%. What is the 3-month futures rate if spot-futures parity exists?

• A)$15.48
• B)$15.82
• C)$16.01
• D)$16.13
• E)$16.24

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Definitions:

Economic Entity Assumption

A fundamental principle in accounting that separates the transactions of a business from those of its owners or other businesses.

Sole Proprietorship

A business structure owned by a single individual, where the owner is personally responsible for all financial obligations and liabilities.

Personal Economic Events

This refers to financial transactions and activities that directly affect an individual's economic situation, such as income, expenditures, savings, and investments.

Historical Cost

The original monetary value of an asset or investment at the time of its acquisition.