USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 105

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The S&P 500 stock index is at 1300. The annualized interest rate is 4.0 percent, and the annualized dividend is 2 percent. You are currently considering purchasing a two-month futures contract for your portfolio.
-Refer to Exhibit 15.12. If the futures contract was currently available for 1350, calculate the arbitrage profit.

• A) $8.33
• B) $28.45
• C) $45.67
• D) $50.00
• E) $54.33

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Definitions:

Utility Function

A mathematical representation of how different goods or outcomes give different levels of satisfaction or happiness to an individual.

Whisky Consumption

The act of drinking whisky, a distilled alcoholic beverage made from fermented grain mash, often associated with certain health, social, and cultural implications.

Gallons

A unit of measurement for volume primarily used in the United States to measure liquids, with 1 gallon equaling approximately 3.785 liters.

Utility Function

A mathematical representation used in economics to describe how the quantities of goods or services consumed lead to a level of consumer satisfaction or utility.