Compute the dividend yield d on sindy spot

Reference no: EM131457972

Question: Consider SINDY Index obtained by averaging stock prices and a synthetic index SINDY spot that replicates its performance.

(1) SINDY's current level I is 10,000, and the synthetic index's price S is $10,000.

(2) A newly written forward contract on the index matures after T = 0.5 years.

(3) The continuously compounded interest rate r is 5 percent per year.

(4) Stocks constituting SINDY spot paid $190 of dividends last year and are expected to pay the same this year.

a. Compute the dividend yield D on SINDY spot.

b. Compute the forward price F.

Reference no: EM131457972

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