Assume that a stock market index currently has a value of 200. The dividend yield on the

Question:

Assume that a stock market index currently has a value of 200. The yield on the underlying in the index is expected to be 4% during the next six months. New-issue six-month Treasury bills now sell for a six-month yield of 6%.
a. What is the theoretical value of a six-month futures contract on the index?
b. What potential problems are inherent in this calculation? Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...