Determining the price of the index


Suppose the price for a six-month S&P index futures contract is 552.3. If the risk-free interest rate is 7.5% per year and the dividend yield on the stock index is 4.2% per year, and the market is complete and there is no arbitrage, what is the price of the index today?

A. 543.26

B. 552.11

C. 555.78

D. 560.02

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Finance Basics: Determining the price of the index
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