Question 5 (157) As newly employed at the London International Financial Futures Exchange you have been asked to price a stock future contract on the stock Gapps Inc. Each contract calls for delivery of 100 shares of stock in one year. The company pays an annual dividend of 5 and the T-bill rate is 3% per year. a) If the dividend yield is 5%, what should the futures price be? (5p) b) If the stock price increases with 25%, how will this affect the margin account of an investor who have invested in one stock future contract? Calculate and explain! (5p) c) Assuming the investor had a long position in the contract and that the margin on the investor's position is 8000, what is the percentage return on the investor's position (5p) Question 5 (157) As newly employed at the London International Financial Futures Exchange you have been asked to price a stock future contract on the stock Gapps Inc. Each contract calls for delivery of 100 shares of stock in one year. The company pays an annual dividend of 5 and the T-bill rate is 3% per year. a) If the dividend yield is 5%, what should the futures price be? (5p) b) If the stock price increases with 25%, how will this affect the margin account of an investor who have invested in one stock future contract? Calculate and explain! (5p) c) Assuming the investor had a long position in the contract and that the margin on the investor's position is 8000, what is the percentage return on the investor's position (5p)