Suppose the value of the S&P 500 stock index is currently 1,000. 1-a. If the 1-year T-bill
Fantastic news! We've Found the answer you've been seeking!
Question:
Suppose the value of the S&P 500 stock index is currently 1,000. |
1-a. | If the 1-year T-bill rate is 7% and the expected dividend yield on the S&P 500 is 6%, what should the 1-year maturity futures price be? |
Futures price | $ |
1-b. | What if the T-bill rate is less than the dividend yield, for example, 1%? If the t-bill rate is less than the dividend yield, then the futures price should be: a.)less than the spot price b.) more than the spot price |
Related Book For
Essentials of Investments
ISBN: 978-0077835422
10th edition
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
Posted Date: