What would be the spot price if a stock index futures price were $75,the risk-free rate were 10 percent,the dividend yield 3 percent,and the futures expires in three months?
A)$73.70
B)$77.48
C)$72.60
D)$76.32
E)none of the above

Question

Quizplus · Accepted Answer

The spot price can be calculated using the formula: Spot Price = Futures Price / (1 + (Risk-Free Rate - Dividend Yield) * Time to Expiration). Plugging in the values: Spot Price = $75 / (1 + (0.10 - 0.03) * 0.25) = $73.70.

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