On March 15 the cash SP500 is priced 1000. The SP500 futures contract which matures 9 months later in December has a price of 1200. The risk-free interest rate over this 9-month period is 5% while the dividend yield is 3%.

Would an investor be better of investing his money in the spot SP500 or buying the futures contract on this index?

		it cannot be determined since the price of the of futures contract and the price of the spot in December is not known on March 15
		better to invest in the spot market
		better to invest in the futures market only if it increases more than the spot market over this 9-month period
		better to invest in the spot market only if it increases more than the futures market over this 9-month period
		better to invest in the futures market