Suppose that the risk-free interest rate is 12% per annum with continuous compounding and a stock that pays 1 dollar dividend in 3, 6 and 9 months time. The current stock price is $40, and the futures price for a contract deliverable in 11 months is $45.

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.