Suppose That the Current Level of the Standard & Poor's

question 67

Multiple Choice

Suppose that the current level of the Standard & Poor's Index is 500. The prospective dividend yield on S&P 500 stocks is 2 percent, and the risk-free interest rate is 6 percent. What is the value of a one-year futures contract on the index? (Assume all dividend payments occur at the end of the year.)

• A)530
• B)520
• C)540
• D)560

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Definitions:

Exocytosis

Process by which a cell expels a vesicle’s contents to extracellular fluid.

Entropy

A measure of disorder or randomness in a system, often associated with the second law of thermodynamics.

Second Law

Typically refers to the Second Law of Thermodynamics, which states that the entropy of an isolated system always increases.

Concentration Gradient

The gradual difference in the concentration of solutes in a solution between two regions, often leading to diffusion.