Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 10, 2024

you have invested in an index level now is at 20,000. You now want to sell this particular index. The dividend next year is 200

you have invested in an index level now is at 20,000. You now want to sell this particular index. The dividend next year is 200 and the risk free rate is at 5%.

If you have a 1 year future contract, what is the price if there is no arbitrage opportunity?

If arbitrage opportunity exits, what is the profit behind that.

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

Recommended Textbook for

Financial Management Theory and Practice

Authors: Eugene F. Brigham, Michael C. Ehrhardt

16th edition

1337902608, 978-1337902601

More Books

Students also viewed these Finance questions

Question

★★★★★

Draw the free-body diagram for a basketball player (a) Just before leaving the ground on a jump, and (b) While in the air. See Fig. 4-41. ERN CA VIG (a)

Answered: 1 week ago

Question

★★★★★

Water at 15°C is drained from a large reservoir using two horizontal plastic pipes connected in series. The first pipe is 20 m long and has a 10-cm diameter, while the second pipe is 35 m long...

Answered: 1 week ago

Question

★★★★★

Why do some people resist change?

Answered: 1 week ago

Question

★★★★★

Braun Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the...

Answered: 1 week ago

Question

★★★★★

GME didnt pay dividends, but paid off its debt early and now can. If GME issues an unexpected $0.50 cent dividend, you have to pay it as a shorter. Additionally, you have to pay 25% of the initial...

Answered: 1 week ago

Question

★★★★★

A two-dimensional diverging duct is being designed to diffuse the high-speed air exiting a wind tunnel. The x-axis is the centerline of the duct (it is symmetric about the x-axis), and the top and...

Answered: 1 week ago

Question

★★★★★

3. A company distributes a product that sells for 580 per unit. Variable expenses are $40 ner! unit, and fixed expenses total $200,000 annually. Assume that the company sold 10,000 units Last year....

Answered: 1 week ago

Question

★★★★★

3.Fresh Foods wants to decrease the total cost of guava. Identify three costs areas - other than price - that Fresh Foods to focus on to decrease total cost. Explain why you choose those cost areas....

Answered: 1 week ago

Question

★★★★★

i.Suggest at least THREE (3) kinds of analytics and machine learning algorithms that Champo Carpets can use to solve their problems, and in general, for value creation. ii.Explain the data strategy...

Answered: 1 week ago

Question

★★★★★

While traveling on an assignment that is being paid for by your employer, you visit an area in which you would really like to live but can never find time to visit on your own. You have five days to...

Answered: 1 week ago

Question

★★★★★

5. Case Study 2. Gojek and Grab Strategy The case study below explains that there are 2 industries that provide on-demand services, Gojek and Grab. Both are fiercely competitive in the same market in...

Answered: 1 week ago

Question

★★★★★

Why Co-Branding is an important strategy for the marketers? How does it work? Discuss with the help of some examples. How you can differentiate between brand extension and line extension? Discuss...

Answered: 1 week ago

Question

★★★★★

You are an attorney in South Africa. Your client denies that he killed the deceased with intent. the deceased was a wheelchair-bound 92-year old woman. According to your client, the deceased attacked...

Answered: 1 week ago

Question

★★★★★

The following reconciling items are applicable to the bank reconciliation for Forde items in a bank reconciliation. Co. Indicate how each item should be shown on a bank reconciliation. {LO 3), (a)...

Answered: 1 week ago

Question

★★★★★

Stern Corporations management wants to maintain a minimum monthly cash balance of $8,000. At the beginning of September, the cash balance is $12,270, expected cash receipts for September are $97,200,...

Answered: 1 week ago

Question

★★★★★

Kersee Company on June 15 sells merchandise on account to Eng Co. for $\$ 1,000$, terms $2 / 10, \mathrm{n} / 30$. On June 20, Eng Co. returns merchandise worth $\$ 300$ to Kersee Company. On...

Answered: 1 week ago

Previous Question Next Question