Assume That the S&P 200 Is at 3850 $\$ 3897.67$

question 24

Multiple Choice

Assume that the S&P 200 is at 3850.The continuous dividend yield is 5.5% per annum and the risk free rate is 6.5% per annum.An SPI contract with 45 days to expiry would be priced at?

• A) \( \$ 3897.67 \)
• B) \( \$ 3852.87 \)
• C) \( \$ 3857.24 \)
• D) \( \$ 3854.75 \)

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Definitions:

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax deductions obtained on interest payments.

Bond Rating

A rating assigned to a bond that indicates its credit quality. The rating reflects the issuer's ability to repay the bond's principal and interest.

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax deductions on interest payments, effectively lowering the interest expense.

Bond Prices

The market value of a bond, which can fluctuate based on interest rates, credit quality of the issuer, and other factors.