Exhibit 13-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 55

Multiple Choice

Exhibit 13-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
December futures on the S&P 500 stock index trade at 250 times the index value of 1187.70. Your broker requires an initial margin of 10% on futures contracts. The current value of the S&P 500 stock index is 1178.
-Refer to Exhibit 13-1. Calculate the return on a cash investment in the S&P 500 stock index over the same time period

• A) 1.87%
• B) -0.68%
• C) -14.90%
• D) 10.36%
• E) None of the above

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Definitions:

Bicameralism

The practice of dividing a legislative body into two separate chambers or houses, typically an upper and a lower house.

Legislative Chambers

Bodies within a legislative branch of government, such as the Senate and House of Representatives in the United States, responsible for making laws.

Executive Branch

The branch of the United States government responsible for the execution and enforcement of laws, headed by the President.

Supreme Court

The highest federal court in the United States, consisting of nine Justices and holding the ultimate appellate jurisdiction over all U.S. federal court and state court cases concerning issues of federal law.