There Is a Futures Contract on a Stock That Expires

question 81

Multiple Choice

There is a futures contract on a stock that expires in 7 months. The stock is currently priced at $78.32, and has a continuous dividend yield of 1.4 percent. If the risk-free rate of interest is 4.9 percent, what is the futures price?

• A) $80.87
• B) $80.54
• C) $79.91
• D) $80.06
• E) $76.71

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Definitions:

Atomic Components

The basic, indivisible parts or elements of a system.

Atomic Statements

The simplest type of statements that cannot be broken down any further into other statements, often considered the building blocks of logic.

Connectives

In logic and linguistics, connectives are words or phrases that connect sentences or phrases, such as "and", "or", "if...then", indicating the relationship between them.

Main Connective

In logic, the operator that determines the overall value of a compound statement, such as "and", "or", or "if... then".