1. Price a 6 month forward on a single security, without a dividend, currently priced at $74.22 2. Price the future on the same security as in problem 1 assuming it has a dividend payment of $0.47 at the end of the second month. 3. Again, using the security in problem 1, price the forward assuming that there is a dividend yield of .04%. 4. You have a portfolio with a value of $1 Million USD. It is comprised of stocks and cash. The overall portfolio is highly correlated with the S&P 500. You believe that the S&P 500 will decline in the following 6 months. How would you hedge your portfolio? Explain in terms of the number and type of contracts you would purchase and the timing of those actions. Assume your cash position is sufficient for hedging and that you will not need to sell securities to finance the hedge. Please note that the S&P 500 futures contract controls the equivalent of 25 S&P Index prices. Assume today is 1 Oct 2021 The spot price for the S&P Index is 75 The contracts for the S&P Futures Prices are as follows (Assume that you may buy or sell at this price): Nov'21: 4480 Dec'21: 4493 Jan 22: 4521 Feb'22: 4530 Mar 22: 4540 5. Explain the difference between forwards and futures and the reason(s) you would select one or the other instrument. 1. Price a 6 month forward on a single security, without a dividend, currently priced at $74.22 2. Price the future on the same security as in problem 1 assuming it has a dividend payment of $0.47 at the end of the second month. 3. Again, using the security in problem 1, price the forward assuming that there is a dividend yield of .04%. 4. You have a portfolio with a value of $1 Million USD. It is comprised of stocks and cash. The overall portfolio is highly correlated with the S&P 500. You believe that the S&P 500 will decline in the following 6 months. How would you hedge your portfolio? Explain in terms of the number and type of contracts you would purchase and the timing of those actions. Assume your cash position is sufficient for hedging and that you will not need to sell securities to finance the hedge. Please note that the S&P 500 futures contract controls the equivalent of 25 S&P Index prices. Assume today is 1 Oct 2021 The spot price for the S&P Index is 75 The contracts for the S&P Futures Prices are as follows (Assume that you may buy or sell at this price): Nov'21: 4480 Dec'21: 4493 Jan 22: 4521 Feb'22: 4530 Mar 22: 4540 5. Explain the difference between forwards and futures and the reason(s) you would select one or the other instrument