In March 2009, nine-month futures on the Brazilian Ibovespa stock index traded at 44,439. Spot was 41,908.

Question:

In March 2009, nine-month futures on the Brazilian Ibovespa stock index traded at 44,439. Spot was 41,908. The interest rate was 11.25% and the dividend yield was about 3%. Were the futures fairly priced?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...