.(a) A future contract is available on R Ltd that pays an annual dividend of Rs. 4 and

whose stock is currently priced at Rs. 125. Each future contract calls for the delivery of

1000 shares to stock in one year, daily marking to market. The corporate treasury bill

rate is 8%. Given the above information, what should the price of one future contract

be?

.(b) A future contract is available on R Ltd that pays an annual dividend of Rs. 4 and

whose stock is currently priced at Rs. 125. Each future contract calls for the delivery of

1000 shares to stock in one year, daily marking to market. The corporate treasury bill

rate is 8%. If the company stock price decreases by 6%, what will be the price of one

futures contract?