Find the dividend rate by creating a weighted average

Assignment Help Finance Basics

Reference no: EM131937513

Question: Assume that the risk-free interest rate is 9% per annum with continuous compounding and that the dividend yield on a stock index varies throughout the year. In February, May, August, and November, dividends are paid at a rate of 5% per annum. In other months, dividends are paid at a rate of 2% per annum. Suppose that the value of the index on July 31 is 1,300. What is the futures price for a contract deliverable on December 31 of the same year? (Hint: Find the dividend rate by creating a weighted average with the returns. For example: How many months did the dividend pay 5% and how many months did the investor pay the other amount?)

Reference no: EM131937513

Questions Cloud

How you analyze and present the organizational chart : How you analyze and present the organizational chart if you are the rooms division of a 5 star resort with 250 rooms

Determining the administrative issues : Discuss two to three challenges an administrator may face when developing and reviewing proposals for budget cuts.

Differences between government and business budget making : Describe and discuss the apparent differences between government and business budget making.

What is the NPV if the borrower refinances the loan : Considering the following information, what is the NPV if the borrower refinances the loan?

Find the dividend rate by creating a weighted average : Assume that the risk-free interest rate is 9% per annum with continuous compounding and that the dividend yield on a stock index varies throughout the year.

Considering the pricing of air fare : What impact do you think social media has on considering the pricing of air fare? Would the pricing competition be the same without the online tools?

Assignment-health insurance expansion : Health care market failures, such as adverse selection, can be addressed through government policy and regulation.

What problems emerged as a result of piloting : What problems emerged as a result of piloting. Discuss how you addressed or would address these problems/issues before live data collection.

What about triple in value : What is the approximate probability that your money will double in value in a single year? (Do not round intermediate calculations).

User Account

All Pages