Would you go short or long on the futures contract
Course:- Financial Management
Reference No.:- EM13942978

Assignment Help >> Financial Management

Your stock portfolio is worth $10M with a beta of 1.1. The spot price of S&P 500 is 950. Each S&P 500 contract is for $250 per index points. To protect against the market decline

a. How many futures contract should you need?

b. Would you go short or long on the futures contract

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Company raises 40 on 60. VC takes standard participating preferred. Co. is acquired for $160 two years later. What is pre-money valuation? What is post-money valuation? How mu
A three-year bond with 2.5% annual coupons yields 3%. A one-year zero coupon bond yields 2.80% and a three-year zero coupon bond yields 2.95%. Using the concept of bootstrappi
The market price of a security is $36. Its expected rate of return is 11%. The risk-free rate is 4%, and the market risk premium is 9%. What will the market price of the secur
Unsophisticated capital budgeting techniques do not: a. examine the size of the initial outlay b. take into account unconventional cash flow patters c. explicitly consider the
You recently purchased a stock that is expected to earn 24 percent in a booming economy, 13 percent in a normal economy, and lose 2 percent in a recessionary economy. There is
What would be the effect on companies' profitability and risk if sales fluctuate by 10 percent? If the chemical company intends to acquire a less risky firm, which one shoul
Because litigation is so costly, many firms settle suits that they are quite sure they would win if litigated. It is cheaper to settle for $10,000 or $50,000 rather than consu
Adrien has a portfolio with three stocks. He owns 100 shares of stock A, which is currently priced at $44.00 per share, 155 shares of stock B, which currently sells for $56.00