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?
Find 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 you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Received cash of $43,000 from the issue of common stock. Performed $62,000 of services on account. Incurred $9,300 of other operating expenses on account. Paid $35,000 cash for salaries expense. Collected $41,500 of accounts receivable.
Answers (1)
In a corporation, the shareholders receive 1 vote for each share of stock they hold, which is usually based on the amount of money the invested in the company.
Answers (1)
A human services worker has begun a plan of action for a juvenile offender. She discovers he has skipped a couple of counseling sessions to stay home and play the latest World of Warcraft video game.
Answers (1)
Jim was a mechanic. One day when he attempted to weld a car's gasoline tank, it exploded and he was hurt. He filed to collect workers' compensation.
Answers (1)
18th-century economist adam smith illustrated improvements in efficiency in manufacturing units through the application of:
Answers (1)
New Questions in Business
If Gerry makes a deposit of $1,500 at the end of each quarter for five years, how much will he have at the end of the five years assuming a 12% annual return and quarterly compounding?
Answers (1)
Explain how globalization influence management
Answers (1)
The following information relating to a company's overhead costs is available. Col1 = Actual total variable overhead, Actual total fixed overhead, Budgeted variable overhead rate per machine hour, Budgeted total fixed overhead, Budgeted machine
Answers (1)
A homemaker enters the work force, taking a job that will pay $40,000 over the year. the homemaker must pay $16,000 over the year for professional child care services. how much does gdp change?
Answers (1)
The law of supply states that as the price of a good rises, the quantity supplied of that good disappears. decreases. remains the same. increases.
Answers (1)