Given a Stock Index with a Value of $1,100, an Anticipated

question 23

Multiple Choice

Given a stock index with a value of $1,100, an anticipated dividend of $27, and a risk-free rate of 3%, that should be the value of one futures contract on the index

• A)$943.40
• B)$970.00
• C)$913.40
• D)$1,106.00
• E)$1,000.00

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Definitions:

Canadian Dollars

The official currency of Canada, represented by the symbol CAD or sometimes CA$.

Exchange Rate

Specifies the number of units of a given currency that can be purchased for one unit of another currency.

Exchange Rate Risk

Exchange rate risk, or currency risk, refers to the potential for loss due to fluctuations in the foreign exchange rate between two currencies.

Political Risk

The risk of losing money due to changes in a country's political landscape or government policies that negatively affect investments.