Consider a 9-month futures contract on an index with the dividend yield on the underlying stocks being

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Consider a 9-month futures contract on an index with the dividend yield on the underlying stocks being 3%. The current value of the index is 1,700 and the risk-free interest rate is 7%.

What is the futures price?

What happens to the futures price if the dividend yield increases to 4%?

What happens to the futures price is the risk-free rate declines to 5%?

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Investments

ISBN: 9780073530703

9th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Posted Date: Apr 05, 2023 01:22 AM

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Consider a 9-month futures contract on an index with the dividend yield on the underlying stocks being

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The futures price is calculated using the cost of carry mod... View the full answer

Investments

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