On a particular day, the September S&P500 stock index futures price was $960.5. The S&P500 index was at $956.49. The contract expires 73 days later.

A. Assuming continuous compounding, suppose the risk-free rate is 5.96% and the dividend yield on the index is $2.75%. Is the futures overpriced or underpriced?

B. Assuming annual compounding, suppose the risk-free rate is 5.96 and the future value of dividends on the index is $5.27. Is the futures overpriced or underpriced?