Suppose theâ S&P 500 is at 906â, and aâ one-year European call option with a strike price of $575 has a negative time value. If the interest rate is 4%â, what can you conclude about the dividend yield of theâ S&P 500? â (Assume all dividends are paid at the end of theâ year.)
The dividend yield must be at least
Suppose theâ S&P 500 is at 906â, and aâ one-year European call option with a strike price of $575 has a negative time value. If the interest rate is 4%â, what can you conclude about the dividend yield of theâ S&P 500? â (Assume all dividends are paid at the end of theâ year.)
The dividend yield must be at least
Related questions
Using the data in the table below
a. What was the average dividend yield for theâ S&P 500 fromâ 2002-2014? â(Round to two decimalâ places.)
b. What was the volatility of the dividendâ yield? â(Round to two decimalâ places.)
c. What was the average annual return of theâ S&P 500 fromâ 2002-2014 excluding dividendsâ (i.e., from capital gainsâ only)? â(Round to two decimalâ places.)
d. What was the volatility of theâ S&P 500 returns from capitalâ gains? â(Round to two decimalâ places.)
e. Were dividends or capital gains a more important component of theâ S&P 500's average returns during thisâ period? Which were the more important source ofâ volatility? â(Round to two decimalâ places.)
| Year End | S&P 500 Index | Dividends Paid* | S&P 500 Realized Return | Microsoft Realized Return | 1-Month T-Bill Return | ||
| 2001 | 1148.08 | ||||||
| 2002 | 879.82 | 14.53 | -22.1% | -22.0% | 1.6% | ||
| 2003 | 1111.92 | 20.8 | 28.7% | 6.8% | 1.0% | ||
| 2004 | 1211.92 | 20.98 | 10.9% | 8.9% | 1.2% | ||
| 2005 | 1248.29 | 23.15 | 4.9% | -0.9% | 3.0% | ||
| 2006 | 1418.3 | 27.16 | 15.8% | 15.8% | 4.8% | ||
| 2007 | 1468.36 | 27.86 | 5.5% | 20.8% | 4.7% | ||
| 2008 | 903.25 | 21.85 | -37.0% | -44.4% | 1.5% | ||
| 2009 | 1115.1 | 27.19 | 26.5% | 60.5% | 0.1% | ||
| 2010 | 1257.64 | 25.44 | 15.1% | -6.5% | 0.1% | ||
| 2011 | 1257.6 | 26.59 | 2.1% | -4.5% | 0.0% | ||
| 2012 | 1426.19 | 32.67 | 16.0% | 5.8% | 0.1% | ||
| 2013 | 1848.36 | 39.75 | 32.4% | 44.2% | 0.0% | ||
| 2014 | 2058.9 | 42.47 | 13.7% | 27.5% | 0.0% | ||
