Exhibit 20.1
Use the Information Below for the Following 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% percent on futures contracts. The current value of the S&P 500 stock index is 1178.
-Refer to Exhibit 20.1.Calculate the return on a cash investment in the S&P 500 stock index if the ending index value is 1170 over the same time period.
A) 1.87%
B) -0.68%
C) -14.90%
D) 10.36%
E) None of the above

Question

Quizplus · Accepted Answer

Return on cash investment in the index = (1170 - 1178)/1178 = -0.0068 or -0.68%

Exhibit 20.1 Use the Information Below for the Following Problem(S)