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jolli1 [7]
3 years ago
5

Consider the futures contract written on the S&P 500 index and maturing in one year. The interest rate is 4.2%, and the futu

re value of dividends expected to be paid over the next year is $19. The current index level is 1,433. Assume that you can short sell the S&P index. a. Suppose the expected rate of return on the market is 8.4%. What is the expected level of the index in one year?
Business
1 answer:
Anarel [89]3 years ago
7 0

Answer:

$1,534.372

Explanation:

The computation of the expected level of the index in one year is shown below:

= Current index level × 1 + expected rate of return on the market - expected future value of the dividend paid over the next year

= $1,433 × (1 + 8.4%) - $19

= $1,553.372 - $19

= $1,534.372

We simply applied the above formula so that the expected level of the index in one year could come

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7 0
2 years ago
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Jeremy has a new client. He has identified a research question that relates to a transaction that the client completed several m
Ilia_Sergeevich [38]

Answer:

Closed facts.

Explanation:

In a situation of close facts the action has already been taken before now, and the researcher is to analyse it and determine best course of action.

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5 0
3 years ago
It is theorized that the price per share of a stock is inversely proportional to the prime​ (interest) rate. In January​ 2010, t
Zanzabum

Answer:

price per share in March is $96

Explanation:

given data

January price per share = ​$193.04

January prime rate = 2.75%

march prime rate = 5.50​%

to find out

What was the price per share in March

solution

we know that here price is proportional to prime rate

Price ∝ \frac{1}{rate}   ........1

so price = k ×  \frac{1}{rate}      ...............2

k is constant here

so put all value for january

193.04 = k ×  \frac{1}{2.74%}

k = 5.28

so for  march price per share will be by equation 2

price = 5.28 ×  \frac{1}{5.50%}

price = 96

so  price per share in March is $96

3 0
3 years ago
A bakery makes a limited number of croissants each day for sale in its coffee shop. The croissants cost $1.00 each to produce an
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Answer:

$0.40 ; $1 and $71.43%

Explanation:

The computation is shown below:

Excess cost is

=  Unit cost - Salvage Value

= $1 - $0.60

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The shortage cost is

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= $2 - $1

= $1

And, the optimal service level is

= Shortage cost ÷ (Shortage cost + excess cost)

= $1 ÷ $1.60

= 71.43%

Basically we applied the above formulas

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3 years ago
Helpful in assessing the risk of lending to investors for particular projects, which of the following calculations measures the
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Answer:

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7 0
2 years ago
Read 2 more answers
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