A stock index is valued at $800 and pays a continuous dividend at the rate of 3% per year. The 6-month futures contract on that index is trading at $758. The continuously compounded risk free rate is 2.5% per year. There are no transaction costs or taxes. Is the futures contract priced so that there is an arbitrage opportunity? If yes, which of the following numbers comes closest to the arbitrage profit you could realize by taking a position in one futures contract?
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A stock index is valued at $800 and pays a continuous dividend at the rate of 3% per year. The 6-month futures contract on that index is ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
When a healthcare organization allows an unsafe condition to exist on its property and does nothing to address it and a visitor gets injured, the organization will be held liable because?
Answers (1)
Suppliers are more likely to be powerful relative to the firms to which they sell their goods and services if: a. differentiation among existing suppliers is high. b. the suppliers' industry is highly fragmented. c.
Answers (2)
Mansfield Corporation granted 4,200 of its $2 par common shares to executives, subject to forfeiture if employment is terminated within three years.
Answers (1)
True or false: if jacques's fire engines were a competitive firm instead and $160,000 were the market price for an engine, increasing its production would not affect the price at which he can sell engines.
Answers (1)
Why is a weather specialist important on major incidents?
Answers (1)
New Questions in Business
Which of the following factors does not cause a shift in the labor demand curve? A. Changing technology. B. Changes in output prices. C. Changes in the wage rate. D. Changing input prices.
Answers (1)
What is the name given to the operations used by most organizations to reach their customer goals? O A. Research and development O B. Universal marketing functions O C. Customer support O D. Market planning
Answers (2)
What term is used to describe spread-out or low-density development beyond the edge of services and employment? edge cities sprawl common-interest developments gated communities?
Answers (1)
Elkins Corporation uses the perpetual inventory method. On March 1, it purchased $33,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $3,000. On March 9, Elkins paid the supplier. On March 9, Elkins should credit:a.
Answers (1)
State the main purpose of a business plan
Answers (2)