Question
A stock index is at 755.42. A futures contract on the index expires in 57 days. The risk-free interest rate is 6.25 percent. At expiration,
A stock index is at 755.42. A futures contract on the index expires in 57 days. The risk-free interest rate is 6.25 percent. At expiration, the value of the dividends on the index is 3.94.
A. Find the appropriate futures price, using both the future value of the dividends and the present value of the dividends.
B. Find the appropriate futures price in terms of the two specifications of the dividend yield.
C. Using your answer in Part B, find the futures price under the assumption of continuous compounding of interest and dividends.
(Solve this question as soon as possible for assignment)
(Im posting this question second time, first time chegg doesnt answer)
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