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(d) An equity index is currently 1,200. A fourteen month zero coupon bond costs 0.965 and a fourteen month forward on the index costs 1,240.

(d) An equity index is currently 1,200. A fourteen month zero coupon bond costs 0.965 and a fourteen month forward on the index costs 1,240. Calculate the value of the fourteen month continuously compounded dividend yield on the index. Explain the formulae you use. [6 marks]
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(d) An equity index is currently 1,200. A fourteen month zero coupon bond costs 0.965 and a fourteen month forward on the index costs 1,240. Calculate the value of the fourteen month continuously compounded dividend yield on the index. Explain the formulae you use. [6 marks]

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