4. (a) The current level of a stock index is 4500 . The dividend yield...
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4. (a) The current level of a stock index is 4500 . The dividend yield on the index is 4% (in continuously compounded terms), and the risk-free rate of interest is 8% per annum, continuously compounded. What should be the six-month futures price on the index? (b) Suppose that the continuously compounded interest rates in Norway and the US are, respectively, 8% and 4%, per annum. Suppose that the spot price of the Norwegian Kroner is $0.091. Calculate the forward price of Norwegian Kroner (in USD) for delivery in five months
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