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Suppose that the risk-free interest rate is 3 per annum

(Index futures prices with a market risk premium) Suppose that the risk-free interest rate is 3% per annum with continuous compounding and that the dividend yield on a stock index is 4% per annum. The index is currently 400, and has an excess expected return of 6% for market risk. What is the futures price with a four month maturity?

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Finance Basics: Suppose that the risk-free interest rate is 3 per annum

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