Question

A stock futures contract is priced at $58.38. The stock has a dividend yield of 1.9...

A stock futures contract is priced at $58.38. The stock has a dividend yield of 1.9 percent, and the risk-free rate is 6 percent. If the futures contract matures in eight months, what is the current stock price?

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
a. A futures contract on a stock with a current price of $120 matures in six...
a. A futures contract on a stock with a current price of $120 matures in six months. The risk-free rate is 4.5 percent per year and the stock has an annual dividend yield of 3 percent. What is the futures price? b. Suppose you bought on S $ P 500 contract at a futures price of 4,500. The stock index price is $205 and at maturity, the S & P 500 had fallen to 4020. What is the contract size?
Suppose that an Intel single-stock futures contract expires in four months. The stock pays a dividend...
Suppose that an Intel single-stock futures contract expires in four months. The stock pays a dividend in two months. We have the following information. Annualized, continuously compounded risk-free interest rate for 2-month period: r = 3.4%. Annualized, continuously compounded risk-free interest rate for 4-month period: r = 6.96%. Current spot price of Intel stock: $29 per share. Dividend per share of $0.38 in two months. What must the futures price equal in order than no arbitrage opportunity exist?
On March 15 the cash SP500 is priced 1000. The SP500 futures contract which matures 9...
On March 15 the cash SP500 is priced 1000. The SP500 futures contract which matures 9 months later in December has a price of 1200. The risk-free interest rate over this 9-month period is 5% while the dividend yield is 3%. Would an investor be better of investing his money in the spot SP500 or buying the futures contract on this index? better to invest in the spot market only if it increases more than the futures market over this...
Consider a 6-month futures contract on a financial asset with dividend yield q=3.96% per year. Risk...
Consider a 6-month futures contract on a financial asset with dividend yield q=3.96% per year. Risk free rate is 10% per year. Current value of an asset is S0=$25. What should be the 6-month futures price on this asset, if there is no convenience yield and storage costs?
a. A single-stock futures contract on a non-dividend-paying stock with current price $290 has a maturity...
a. A single-stock futures contract on a non-dividend-paying stock with current price $290 has a maturity of 1 year. If the T-bill rate is 3%, what should the futures price be? b. What should the futures price be if the maturity of the contract is 6 years? c. What should the futures price be if the interest rate is 5% and the maturity of the contract is 6 years?
Suppose the current price on a stock is $25, the stock has an annual dividend yield...
Suppose the current price on a stock is $25, the stock has an annual dividend yield of 2.5%. The risk-free rate is 5%. If a futures contract on this stock is available with a 3-month maturity, what should its price be? If the future price in the market is $25.50, how can you structure an arbitrage position.
a)    On January 1st 2019 one share of BBK plc is priced at $35 and is...
a)    On January 1st 2019 one share of BBK plc is priced at $35 and is expected to pay a dividend of $1.25 in 6 months and a further dividend of $1.00 in 1 year. The relevant risk-free rate of interest is 3% per annum with continuous compounding. What should be the price of a forward contract, written on a BBK share, which matures immediately after the second dividend is paid and what is the initial value of the forward...
Smith holds a long position for a Stock index futures contract which is four months from...
Smith holds a long position for a Stock index futures contract which is four months from maturity. A stock index currently stands at 350. The risk-free interest rate is 8% per annum (with continuous compounding) and the dividend yield on the index is 4% per annum. a) What should the futures price for a four-month contract be? b) Suppose one month later the stock price is 351. The dividend yield and index are the same. What is the value of...
Consider a single-stock futures contract on Best Buy Co. The company will pay a quarterly dividend...
Consider a single-stock futures contract on Best Buy Co. The company will pay a quarterly dividend of $0.17 per share prior to expiration of the futures contract. Consider the following scenario. The stock goes ex-dividend in one month; for convenience, we will assume that the dividend is paid at that time. Assume that this dividend is the only one prior to expiration of the futures contract. Annualized, continuously compounded risk-free interest rates: r1 = 3% for one month, and r2...
The stock index futures contract is currently at 10000.00. If the risk-free rate is 3% per...
The stock index futures contract is currently at 10000.00. If the risk-free rate is 3% per year and the dividend yield is greater than 3%, which is a possible equilibrium futures price on a contract which mature in 9 months? 10200 10100 All of these answers are possible 10000 9800