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%. As a result of the company stock price decrease, will an investor that has a

long position in one futures contract of R Ltd realize a gain or loss?

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%. What will be the amount of his gain or loss?