Explain the 1-year maturity futures price

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-Suppose the value of the S&P 500 stock index is currently 1,400. If the 1-year T-Bill rate is 3% and the expected dividend yield on the S&P 500 is 2%, What should the 1-year maturity futures price be?

-OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pay no dividends. Each contract calls for delivery of 1,000 shares of stock in 1 year. The T-bill is 6% per year. If Brandex stock now sells at $120 per share, what should the futures price be?

-Based on information from Part (b), if the Brandex price drops by 3%, what will be the change in the futures price and the change in the investor's margin account?

-Based on information from Part (b), if the margin on the contract is $12,000, what is the percentage return on the investor's position?

Reference no: EM133072175

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