mp3bu

An increase in the dividend yield should decrease the derivative price otherwise your forward contract would increase in value along with an increase in yield/income which should not fundamentally occur otherwise you'd have an arbitrage opp.

All income received while holding a derivative asset (forward, future, option, etc...) should be subtracted. I don 't think you can assume that the underlying index/stock price increases just based off of the increased dividend yield. We know it should, but for the exam I wouldn't assume that the underlying increased in value unless specifically told so.