Suppose the value of the S&P 500 Stock Index is currently $1,800. If the one-year...
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Suppose the value of the S&P 500 Stock Index is currently $1,800. If the one-year T-bill rate is 3.4% and the expected dividend yield on the S&P 500 is 2.8%.
a. What should the one-year maturity futures price be? (Do not round intermediate calculations.)
Futures price $
b. What would the one-year maturity futures price be, if the T-bill rate is less than the dividend yield, for example, 1.8%? (Do not round intermediate calculations.)
Futures price $
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