Find the cash flow from the mark to market

Assignment Help Financial Accounting

Reference no: EM13839683

The multiplier for a futures contract on a certain stock market index is $250. The matu- rity of the contract is one year, the current level of the index is 1,000, and the risk-free interest rate is .2% per month. The dividend yield on the index is .1% per month. Suppose that after one month, the stock index is at 1,020.

Find the cash flow from the mark-to-market proceeds on the contract. Assume that the parity condition always holds exactly.
Find the holding-period return if the initial margin on the contract is $10,000.

Reference no: EM13839683

Questions Cloud

What will be the investors percentage return : The margin requirement on the S&P 500 futures contract is 10%, and the stock index is currently 1,200. Each contract has a multiplier of $250. How much margin must be put up for each contract sold? If the futures price falls by 1% to 1,188, what will..

Discuss the issue of genetic testing and screening : Discuss the issue of genetic testing and screening. What are the benefits and the drawbacks of genetic testing? Specifically, what were they for Reiger

What constraints are there on an economys production : Why might you suspect that the economy might not be able to produce all the schools and beds it wants - What constraints are there on an economys production?

Net present value of the decision : If the company pays tax at a rate of 35% and the opportunity cost of capital is 15%, what is the net present value of the decision to produce the chains in-house instead of purchasing them from the supplier?

Find the cash flow from the mark to market : Find the cash flow from the mark-to-market proceeds on the contract. Assume that the parity condition always holds exactly. Find the holding-period return if the initial margin on the contract is $10,000.

Enter into contracts : 1.Which of the following is something a company has the power to do which an individual does not? Enter into contracts. Own property.

What benefit does a delphi technique provide : When might a researcher or project manager utilize exponential smoothing? What benefit does a Delphi technique provide when working with qualitative-based decision making

What action can you take in the futures market to hedge : What action can you take in the futures market to hedge any adverse movements in bond yields and prices until you actually can buy the bonds? Will you be long or short? Why?

Write a matlab script to simulate the frequency response : Write a MATLAB script to simulate the frequency response for the circuit. Include your code as well as plots of the circuit amplitude frequency response in dB as well as the phase response.

User Account

All Pages