The Spot Rate on a Non-Dividend-Paying Stock Is $42

question 35

Multiple Choice

The spot rate on a non-dividend-paying stock is $42.30. The risk-free rate is 3.75% and the market rate is 11.50%. What is the 3-month futures rate if spot-futures parity exists?

• A)$42.14
• B)$42.54
• C)$42.69
• D)$42.82
• E)$43.89

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Definitions:

Recordkeeping

The process of maintaining accurate and systematic records of financial transactions and other business events.

Custody of Assets

Holding and safeguarding of assets or securities by a financial institution or an individual on behalf of the owner.

Responsibilities

Duties or obligations assigned to individuals or organizations, requiring them to act in certain ways or achieve specific outcomes.

Electronic Funds Transfer

The electronic exchange or transfer of money from one account to another, either within the same financial institution or across different institutions, through computer-based systems.