Suppose the value of the S&P $500$ stock index is currently $$4,200.$

Required:

a$.$ If the $1-$year T$-$bill rate is $6\%$ and the expected dividend yield on the S&P $500$ is $5\%,$ what should the $1-$year maturity futures

price be$?$

b$.$ What if the T$-$bill rate is less than the dividend yield, for example, $1\%?$

Complete this question by entering your answers in the tabs below.

If the $1-$year T$-$bill rate is $6\%$ and the expected dividend yield on the S&P $500$ is $5\%,$ what should the $1-$year maturity futures

price be$?$

Futures price