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Suppose the value of the S&P 500 Stock Index is currently $2,050. If the one-year T-bill...

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Finance

Suppose the value of the S&P 500 Stock Index is currently$2,050. If the one-year T-bill rate is 5.5% and the expecteddividend yield on the S&P 500 is 5.0%.

a. What should the one-year maturity futuresprice be? (Do not round intermediatecalculations.)

Futures price           $

b. What would the one-year maturity futuresprice be, if the T-bill rate is less than the dividend yield, forexample, 4.0%? (Do not round intermediatecalculations.)

Futures price   

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Transcribed Image Text

Suppose the value of the S&P 500 Stock Index is currently$2,050. If the one-year T-bill rate is 5.5% and the expecteddividend yield on the S&P 500 is 5.0%.a. What should the one-year maturity futuresprice be? (Do not round intermediatecalculations.)Futures price           $b. What would the one-year maturity futuresprice be, if the T-bill rate is less than the dividend yield, forexample, 4.0%? (Do not round intermediatecalculations.)Futures price   

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