The Risk-Free Rate Is 5% and the Dividend Yield on the S&P

question 17

Multiple Choice

The risk-free rate is 5% and the dividend yield on the S&P 500 index is 2%.Which of the following is correct when a futures option on the index is being valued?

• A) The futures price of the S&P 500 is treated like a stock paying a dividend yield of 5%.
• B) The futures price of the S&P 500 is treated like a stock paying a dividend yield of 2%.
• C) The futures price of the S&P 500 is treated like a stock paying a dividend yield of 3%.
• D) The futures price of the S&P 500 is treated like a non-dividend-paying stock.

Understand the role and regulations of the Securities and Exchange Commission (SEC) in securities offerings.

Recognize the requirements for registration statements and the effects of distributing a prospectus.

Identify what constitutes a security under the Securities Act of 1933.

Understand the concept of insider trading and its legal implications.

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Definitions:

Suppressed Behavior

Actions or reactions that are deliberately held back, restrained, or controlled.

Antagonistic

Refers to forces, muscles, or substances in opposition to each other, resulting in conflict or inhibition of action.

Extinction of Avoidance

The process through which an avoidance behavior is reduced or eliminated, typically by removing the negative reinforcement that maintained the behavior.

Extinction Trials

A process in classical conditioning where a conditioned stimulus is presented without the unconditioned stimulus, leading to a reduction in the conditioned response over time.