Suppose That the Current Level of the Standard & Poor's

Multiple Choice

Suppose that the current level of the Standard & Poor's Index is 500. The prospective dividend yield on S&P 500 stocks is 2 percent, and the risk-free interest rate is 6 percent. What is the value of a one-year futures contract on the index? (Assume all dividend payments occur at the end of the year.)

A) 530
B) 520
C) 540
D) 560