The current level of the S&P500 is 2,651.50. Assume that the dividend yield on the S&P 500 is 2%. The risk-free interest rate based on the T-bill yield is assumed to be 2.20%.
(1) Based on this assumption, what should a futures contract with a one-year maturity be selling for?
(2) Does the futures price show contango or backwardation? Explain.