Question

The E-MINI S&P 500 (ES) is a futures contract that it is 50 times the S&P 500 index. The contract is traded on the Chicago Mercantile Exchange (CME). Today is September1, 2022. The closing index price today is S(0) = 4, 386.54. At the same time the closing price of the ES contract that expires in December 1st, 2022 is f(0, 3/12) = 4, 365.75. Given this information, address the following: 1. In equity derivatives, the cost of carry denotes the interest cost minus dividends earneded. Assume continuous compounding and that dividends are paid continuously. Given the above information, what is the cost of carry? 2. The main difference between forward and futures contract is that the latter is marked to market (m2m). State one benefit of m2m. 3. What is the advantage/disadvantage of margin requirement?

          The E-MINI S&P 500 (ES) is a futures contract that it is 50 times the S&P 500 index. The
contract is traded on the Chicago Mercantile Exchange (CME). Today is September1, 2022.
The closing index price today is S(0) = 4, 386.54. At the same time the closing price of the
ES contract that expires in December 1st, 2022 is f(0, 3/12) = 4, 365.75. Given this
information, address the following:
1. In equity derivatives, the cost of carry denotes the interest cost minus dividends
earneded. Assume continuous compounding and that dividends are paid continuously.
Given the above information, what is the cost of carry?
2. The main difference between forward and futures contract is that the latter is
marked to market (m2m). State one benefit of m2m.
3. What is the advantage/disadvantage of margin requirement?

The E-MINI S P 500 (ES) is a futures contract that it is 50 times the S P 500 index. The
contract is traded on the Chicago Mercantile Exchange (CME). Today is September1, 2022.
The closing index price today is S(0) = 4, 386.54. At the same time the closing price of the
ES contract that expires in December 1st, 2022 is f(0, 3/12) = 4, 365.75. Given this
information, address the following:
1. In equity derivatives, the cost of carry denotes the interest cost minus dividends
earneded. Assume continuous compounding and that dividends are paid continuously.
Given the above information, what is the cost of carry?
2. The main difference between forward and futures contract is that the latter is
marked to market (m2m). State one benefit of m2m.
3. What is the advantage/disadvantage of margin requirement?

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