CHAPTER 23: FUTURES MARKETS: A CLOSER LOOK

6. a. The value of the underlying stock is: $250 1,350 = $337,500. $25/$337,500 = 0.000074 = 0.0074% of the value of the stock. $40 0.000074 = $0.0030 (less than half of one cent) c. $0.15/$0.0030 = 50. The transaction cost in the stock market is 50 times the transaction cost in the futures market. 7. a. You should be short the index futures ... ................
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