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Consider a 9-month futures contract on an index with the dividend yield on the underlying stocks being 3%. The current value of the index is
Consider a 9-month futures contract on an index with the dividend yield on the underlying stocks being 3%. The current value of the index is 1,700 and the risk-free interest rate is 7%. What is the futures price? What happens to the futures price if the dividend yield increases to 4%? What happens to the futures price is the risk-free rate declines to 5%?
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