Suppose that the value of the S&P 500 stock index is 4,800. Required: a. If each E-mini futures contract (with a contract multiplier of $50) costs $29 to trade with a discount broker, how much is the transaction cost per dollar of stock controlled by the futures contract? Note: Do not round your intermediate calculations. Round your answer to 5 decimal places. b. If the average price of a share on the NYSE is about $59, how much is the transaction cost per "typical share" controlled by one futures contract? Note: Do not round your intermediate calculations. Round your answer to 5 decimal places. c. For small investors, a typical transaction cost (including the bid-ask spread) for direct trades in stocks might be about 9 cents per share. How many times the transactions costs in futures markets is this? Note: Do not round your intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. a. Transaction cost per dollar b. Transaction cost per share c. Number of times $ 0.12000 % 0.00708 0.08 X
Suppose that the value of the S&P 500 stock index is 4,800. Required: a. If each E-mini futures contract (with a contract multiplier of $50) costs $29 to trade with a discount broker, how much is the transaction cost per dollar of stock controlled by the futures contract? Note: Do not round your intermediate calculations. Round your answer to 5 decimal places. b. If the average price of a share on the NYSE is about $59, how much is the transaction cost per "typical share" controlled by one futures contract? Note: Do not round your intermediate calculations. Round your answer to 5 decimal places. c. For small investors, a typical transaction cost (including the bid-ask spread) for direct trades in stocks might be about 9 cents per share. How many times the transactions costs in futures markets is this? Note: Do not round your intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. a. Transaction cost per dollar b. Transaction cost per share c. Number of times $ 0.12000 % 0.00708 0.08 X
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Suppose that the value of the S&P 500 stock index is 4,800.
Required:
a. If each E-mini futures contract (with a contract multiplier of $50) costs $29 to trade with a
discount broker, how much is the transaction cost per dollar of stock controlled by the
futures contract?
Note: Do not round your intermediate calculations. Round your answer to 5 decimal
places.
b. If the average price of a share on the NYSE is about $59, how much is the transaction cost
per "typical share" controlled by one futures contract?
Note: Do not round your intermediate calculations. Round your answer to 5 decimal
places.
c. For small investors, a typical transaction cost (including the bid-ask spread) for direct trades
in stocks might be about 9 cents per share. How many times the transactions costs in
futures markets is this?
Note: Do not round your intermediate calculations. Round your answer to 2 decimal
places.
X Answer is complete but not entirely correct.
a. Transaction cost per dollar
b. Transaction cost per share
c. Number of times
$
0.12000 x %
0.00708
0.08 X
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