Holding-period return and cash flow

Assignment Help Financial Management

Reference no: EM13937356

The multiplier for a futures contract on a certain stock market index is $250. The maturity of the contract is one year, the current level of the index is 1,500, and the risk-free interest rate is 0.3% per month. The dividend yield on the index is 0.2% per month. Suppose that after one month, the stock index is at 1,529.

a. Find the cash flow from the mark-to-market proceeds on the contract. Assume that the parity condition always holds exactly. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Cash flow $

b. Find the holding-period return if the initial margin on the contract is $20,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Holding-period return %

Reference no: EM13937356

Questions Cloud

What was the cash coverage ratio for the year : The Docksider has net income for the most recent year of $25,000. The tax rate was 20 percent. The firm paid $2,500 in total interest expense and deducted $1,500 in depreciation expense. What was the cash coverage ratio for the year?

What must the coupon rate on bonds : The Los Angeles Airport Authority has bonds on the market with 10.5 years to maturity, a yield to maturity of 8%, and a current price of $925. The bonds make semi-annual payments. What must the coupon rate be on LA Airport’s bonds?

What will be bonds price in year : In 2010, Apple issued $1000 face bonds with a 7% semi-annual coupon. The bonds mature in 2030. Exactly 5 years later, a company financially similar to Apple is preparing to issue 20 year $1000 face bonds with a 6.5% semi-annual coupon. What will be A..

What is the implicit interest for this bond in year : Lee Michaels Jewelers recently issued a $1,000 face, 10 year zero coupon bond. The initial offering sold in January, 2008 for $500. Despite the fact that the bond doesn’t pay interest, the IRS says you must declare the implicit interest for tax purpo..

Holding-period return and cash flow : The multiplier for a futures contract on a certain stock market index is $250. The maturity of the contract is one year, the current level of the index is 1,500, and the risk-free interest rate is 0.3% per month. Find the cash flow from the mark-to-m..

How much interest will you pay to bank during year four only : Assume you borrow $100,000 from a bank to buy a house at 7% interest for 30 years with monthly payments. How much do you need to pay every month? And how much interest will you pay to the bank during year 4 only?

What form of efficient market hypothesis has been violated : You read in the wall street journal that apple is introducing a new i phone. Once you read about the news you quickly purchase the stock and make a large profit from this information. If this happens, what form of the efficient market hypothesis has ..

Return on total assets : The Jordan Company has return on total assets of 13%, and the debt-equity ratio is 0.65. What is Jordan’s ROE?

The market price of a treasury bond : The market price of a Treasury bond is quoted as 92.15, it has 16 years to maturity, a $5000 face value, and has coupon rate of 5% that pays out coupon payments semi-annually. What is the yield to maturity?

User Account

All Pages