In: Finance
Suppose the value of the S&P 500 Stock Index is currently
$3,350.
a. If the one-year T-bill rate is 4.6% and the
expected dividend yield on the S&P 500 is 4.2%, what should the
one-year maturity futures price be? (Do not round
intermediate calculations. Round your answer to 2 decimal
places.)
b. What would the one-year maturity futures price
be, if the T-bill rate is less than the dividend yield, for
example, 3.2%? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)