Given a Stock Index with a Value of $1,200, an Anticipated

question 20

Multiple Choice

Given a stock index with a value of $1,200, an anticipated dividend of $45, and a risk-free rate of 6%, what should be the value of one futures contract on the index?

• A) $1,227.00
• B) $1,070.00
• C) $993.40
• D) $995.09
• E) $1,000.00

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Definitions:

International Financial Reporting Standards

A set of global accounting standards developed by the International Accounting Standards Board (IASB) that outlines how financial transactions and other events should be reported in financial statements.

Private Corporations

Businesses owned by non-governmental organizations or a relatively small number of shareholders or company members which do not offer or trade their company stock to the general public on the stock market.

Single Owner

Refers to a business structure where a single individual owns, manages, and is responsible for all aspects of the business, often known as sole proprietorship.

Legal Entity

An individual, company, or organization that has legal rights and obligations.