Suppose that the value of the S&P 500 stock index is 4,000. a. If each E-mini futures
Question:
Suppose that the value of the S&P 500 stock index is 4,000.
a. If each E-mini futures contract (with a contract multiplier of $50) costs $25 to trade with a discount broker, how much is the transaction cost per dollar of stock controlled by the futures contract?
b. If the average price of a share on the NYSE is about $40, how much is the transaction cost per “typical share” controlled by one futures contract?
c. For small investors, a typical transaction cost (including the bid-ask spread) for direct trades in stocks might be about 5 cents per share. How many times the transactions costs in futures markets is this?
P-63
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ISE Investments
ISBN: 9781266085963
13th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus
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