Today is January 1 and last year's dividend on stocks in the S&P 500 index has just been paid. The yield on a 1-year strip expressed as an EAR is 10%.The current value of the S&P 500 index is $1200. The dividend paid on the S&P 500 index is paid at the end of each year and is 4% of the index's value at the start of the year.The expected change in the value of the index over the next year is 15%.What is the forward price today for delivery of the S&P 500 index in 1 year?

Answer rating: 100% (QA)

To calculate the forward price today for delivery of the SP 500 index in 1 year we ... View the full answer