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Determine the appropriate strategy

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A manager of $10 million of large-cap equities would like to shift 25% of the position to mid-cap equities. The beta of the large-cap position is 0.8, and the average beat of mid-cap stock is 1.2. The betas of the corresponding large and mid-cap futures contracts are 0.75 and 1.25, respectively. The large- and mid- cap total futures prices are $9,800 and $240,000, respectively. Determine the appropriate strategy.

Reference no: EM132371595

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