You Are Trying to Value a 3-Month Futures Contract on a Stock.The

question 78

Multiple Choice

You are trying to value a 3-month futures contract on a stock.The market rate of return is 11.2 percent,the risk-free rate is 3.8 percent,and the dividend yield on the stock is 2.6 percent.The stock is currently selling for $33 a share.What is the value of "T" as used in the formula for computing the future stock price (F_T = S(1 - r) ^T) ?

• A).112
• B).250
• C).026
• D).038
• E).064

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Definitions:

Group Size

The total number of members or observations contained within a defined group or sample.

Degrees Of Freedom

A value, which is different for different statistical tests, that approximates the sample size or number of individual cells in an experimental design.

Degrees Of Freedom

The number of independent pieces of information upon which a statistical estimate is based, minus the number of parameters estimated.

Degree Of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, often related to the number of observations in a sample minus the number of parameters being estimated.