Estimate futures price of the index for three-month

Assignment Help Finance Basics
Reference no: EM132932954

An index is currently at 1,200. The three-month risk-free rate is 3% per annum and the dividend yield over the next three months is 1.2% per annum. The six-month risk-free rate is 3.5% per annum and the dividend yield over the next six months is 1% per annum. Estimate the futures price of the index for a three-month contract and for a six-month contract. All interest rates and dividend yields are continuously compounded. Please show all calculations.

Reference no: EM132932954

Questions Cloud

How consumers and financial service organisations : How consumers and financial service organisations can benefit from using the Personal Property Securities Register, administered by the Australian Financial Sec
Find the sample mean and sample standard deviation : Each employee in the sample is given a 5?% raise. Find the sample mean and sample standard deviation for the revised data set.
Calculate the growth rate of the family : Calculate the growth rate the family would need of their net worth so they could maintain their buying power for each household after the fifth generation takes
Explain the arbitrage opportunity : What is meant by arbitrage? Explain the arbitrage opportunity when the price of a dually listed mining company stock is $50 (USD) on the New York Stock Exchange
Estimate futures price of the index for three-month : An index is currently at 1,200. The three-month risk-free rate is 3% per annum and the dividend yield over the next three months is 1.2% per annum.
What is meant by arbitrage : What is meant by arbitrage? Explain the arbitrage opportunity when the price of a dually listed mining company stock is $50 (USD) on the New York Stock Exchange
Estimate the futures price of the index for a three-month : An index is currently at 1,200. The three-month risk-free rate is 3% per annum and the dividend yield over the next three months is 1.2% per annum.
What is the total profit of trader : Trader A enters into futures contracts to buy 1 million euros for 1.3 million US dollars in three months. Trader B enters in a forward contract to do the same t
What is the current share price-gruber corp : Gruber Corp. pays a constant $9.20 dividend on its stock. The company will maintain this dividend for the next 8 years and will then cease paying dividends fore

Reviews

Write a Review

Finance Basics Questions & Answers

  Estimate the exit value of cirrus electronics

You are a venture capitalist and have been approached by Cirrus Electronics, a private firm. The firm has no debt outstanding and does not have earnings.

  What is going on in the industry

What is going on in the industry? How are the two firms competing? What are the competitive prospects for the forseeable future?

  Why market prices are useful to a financial manager

They can be evaluated to determine whether the market in which the manager exchanges goods and services offers true value.

  Shares of common stock outstanding at a market price

Darion Corporation currently has 200,000 shares of common stock outstanding at a market price of $40 per share. Which of the following statements is TRUE?

  What would your balanced four years

Suppose you deposited the $1000 in 4 payments of $250 each at year 1, year 2, year 3, and year 4. How much would you have in your account at year 4, based on 8 percent annual compounding?

  How much new financing will ttc need next year

(Financial forecasting)The balance sheet of the Thompson Trucking Company (TTC) follows: Thompson Trucking Company Balance Sheet, December 31, 2010 ($ millions)

  Underlying organizational politics

Have you had experience in the past where the underlying organizational politics helped or hindered a project you were a part of? Please describe.

  Would liability insurance with a dollor 10 million limit

Would liability insurance with a $10 million limit for a premium of $225,000 increase expected after-tax earnings for this coming year?

  Bonds make semi annual payments

The bonds make semi annual payments. If these bonds currently sell for 103 percent of par value, what is the YTM?

  Discuss the shift from the eyes of the consumer

Discuss the shift from the eyes of the consumer, the worker, the company, and the environmentalist.

  An investor purchases 500 shares of abc stock on margin at

an investor purchases 500 shares of abc stock on margin at a price of 35 per share. assume an initial margin

  What is sorenson expected stock price

ABC's last dividend paid was $2.7, its required return is 19.7%, its growth rate is 5.3%, and its growth rate is expected to be constant in the future.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd