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Suppose the value of the S&P 500 stock index is currently 1,700. a. If the 1-year T-bill rate is 7% and the expected dividend yield
Suppose the value of the S&P 500 stock index is currently 1,700. 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 b. What if the T-bill rate is less than the dividend yield, for example, 1%? The T-bill rate is less than the dividend yield, then the futures price should be (Click to select) more than the spot price. less than the spot price
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