What would be the spot price if a stock index futures price were $75,the risk-free rate were 10 percent,the continuously compounded dividend yield is 3 percent,and the futures contract 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 * e^((Risk-free rate - Dividend Yield) * Time)
Plugging in the given values, we get:
Spot Price = $75 * e^((0.10 - 0.03) * (3/12))
Spot Price = $73.70

What Would Be the Spot Price If a Stock Index