Template:Dividends on index transactions
Dividends on Index Transactions? No, sir.
We shouldn’t really need to say it, but we will: You don’t get Dividends on an Index Transaction. The Index calculation methodology will either factor the effect of dividends declared on index constituents, by re-weighting components when they pay dividends — in which case you will get the effect of those dividends — or it won’t, in which case you won’t get the effect of those dividends, BECAUSE YOU BOUGHT A DERIVATIVE OF AN INDEX THAT DOESN'T REPLICATE THE EFFECT OF ANY DIVIDENDS[1]. either way, the dividend provisions of the 2002 ISDA Equity Derivatives Definitions aren’t relevant to Index and Index Basket Transactions.[2]
- ↑ The S&P 500 index, for example, does not factor in any dividend payments. Apparently.
- ↑ There may be a half-hearted attempt in one of the MCAs to build in manufactured dividends to certain index products, but it is fiendishly complicated, not to mention wrong-headed, and no-one uses it as far as we know.