Suppose the value of the S&P 500 stock index is currently 1,000.

1-a.	If the 1-year T-bill rate is 7% and the expected dividend yield on the S&P 500 is 6%, what should the 1-year maturity futures price be?

Futures price

$

1-b.	What if the T-bill rate is less than the dividend yield, for example, 1%? If the t-bill rate is less than the dividend yield, then the futures price should be: a.)less than the spot price b.) more than the spot price