Determination of Futures Prices
Suppose that a stock X is selling for $87.50. But you want to buy the stock in 3 months when you will have the money. If the interest rate is 4%, what do you think should be the fair value of the stock futures contract?
Determination of Futures Prices
Supposes that a stock X will pay a $10 dividend in 2 months and then another $10 three months afterward. How much do you think you would pay for the stock futures contract, which will mature in 8 months? Assume that the interest rate is 5%.