Question
In the futures price equation, F=S(1+rf-d)^t why is the dividend yield subtracted? Shouldn't a higher dividend yield mean the contract should be more expensive since
In the futures price equation, F=S(1+rf-d)^t why is the dividend yield subtracted? Shouldn't a higher dividend yield mean the contract should be more expensive since there's a higher cash flow coming to the investor?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Management Core Concepts
Authors: Raymond M Brooks
3rd edition
133866696, 978-0133866698
