Hi David May you please assist in the computation of the Expected future spot price. I thought it was computed using the following formular but im not getting it right. EST=Soexp(Rf -K-Q)t where T=Time Rf- Risk free rate K- Rf+Beta( Market Risk Premium) 167.1. Assume the current (spot) price of the S&P 500 Index is 1,300 and the dividend yield is 2.0% per annum. The overall market return is 7.0% and the riskfree rate is 4.0% per annum; i.e., the market risk premium (a.k.a., equity risk premium, ERP) is 3.0%. Assume all yields/rates are continuously compounded and that we can use the capital asset pricing model (CAPM) where the index has a beta of 1.0 to predict the expected return of the index. What are, respectively, the expected future spot price in one year, E[S(1.0)], and the one-year forward price, F(0,1.0)? a) E[S(1.0)] = 1,367 and F(0, 1.0) = 1,326 b) E[S(1.0)] = 1,394 and F(0, 1.0) = 1,326 c) E[S(1.0)] = 1,394 and F(0, 1.0) = 1,367 d) E[S(1.0)] = 1,394 and F(0, 1.0) = 1,394 Thank you.