Suppose the value of the S&P 500 Stock Index is currently $1,500. If the one-year T-bill rate is 3.2% and the expected dividend yield on the S&P 500 is 2.4%
a. What should the one-year maturity futures price be?
b. What would the one-year maturity futures price be, if the T-bill rate is less than the dividend yield, for example, 1.4%?