Determine the Amount by Which a Stock Index Futures Is

question 29

Multiple Choice

Determine the amount by which a stock index futures is mispriced if the stock index is at 200,the futures is at 202.5,the risk-free rate is 6.45 percent,the dividend yield is 2.75 percent,and the contract expires in three months.

• A)underpriced by 0.64
• B)overpriced by 2.5
• C)overpriced by 9.76
• D)overpriced by 0.64
• E)underpriced by 2.5

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Tax Level

The rate at which income, corporate profits, or other assets are taxed by the government.

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Fixed-income securities issued at a discount and repaid at face value but do not offer interest payments through their life.

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The total amount of tax owed by an individual or corporation to a taxing authority, after all deductions, credits, and exemptions.