Diversified stock portfolio currently worth

Assignment Help Financial Management
Reference no: EM13812315

Suppose you own a well diversified stock portfolio currently worth 10 million. The portfolio has a beta of 0.8. Assume the S&P 500 futures price is 1,200. Describe in detail the futures transaction you would undertake to hedge the value of your portfolio. How many contracts would you buy or sell?

Reference no: EM13812315

Questions Cloud

How much is annual payment : Suppose that you borrow $1000 and the loan is to be repaid in three equal, end of year payments (an ordinary annuity). The interest rate on the loan is 6%. How much is your annual payment?
What is the current share price-no dividends : Metallica Bearings, Inc. is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $10 per share dividend in 10 years and will ..
What is the monthly payment-loan to make renovations : You borrow $50,000 5 year loan to make renovations to a house. The interest rate on this loan is 8% per year. The loan calls for equal monthly payments. What is the monthly payment on this loan?
What is the bonds current yield : A bond with a par value of $1000 and a coupon interest rate of 7% is currently selling for $1234. if the bond matures in 9 years, what is the bonds current yield?
Diversified stock portfolio currently worth : Suppose you own a well diversified stock portfolio currently worth 10 million. The portfolio has a beta of 0.8. Assume the S&P 500 futures price is 1,200. Describe in detail the futures transaction you would undertake to hedge the value of your portf..
Difference between a value-added and a non-value-added cost : What is the difference between a value-added and a non-value-added cost? Give an example of each.
Recoup the price you paid for the call-plus exercise price : You have purchased a call option contract on Smith & Smith common stock. The option contract is for 100 shares. The option has an exercise price of $ 43.00 and S&S’s stock currently trades at $40.00. The option premium is quoted at $ 2.00.
Straight-line depreciation-what is average accounting return : A project has an initial cost of $54,000 and a four-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $2,000, $3,900, $4,500, and $4,500 a year fo..
What is the length of the cash cycle-inventory turnover : West Chester Automation has an inventory turnover of 16 and an accounts payable turnover of 11. The accounts receivable period is 36 days. What is the length of the cash cycle?

Reviews

Write a Review

Financial Management Questions & Answers

  One way to calculate a stocks beta

One way to calculate a stock's beta is to

  Quarter to make the purchase using an interest rate

A testing agency needs to purchase $40,000 worth of equipment 2 years from now. How much should the agency put aside each quarter to make the purchase using an interest rate of 20% per year, compounded quarterly?

  Excel spreadsheet detailing the cost of each scenario

Create an Excel spreadsheet detailing the cost of each scenario, and embed it into a Word document. Provide your recommendations in the Word document as well.

  You are an arbitrageur looking for opportunities to

you are an arbitrageur looking for opportunities to capitalise on mispriced securities. you notice that the bhp put

  What is the default risk premium on corporate bonds

There are questions on Financial Management and Markets. Like What is the default risk premium on corporate bonds?

  Consumer price indexes

During the past year, the consumer price indexes (CPI) of the United States and the Eurozone rose by 1 percent and 3.5 percent, respectively. If PPP holds, what is the percentage change in the value of the EUR over the same time period? (use p.pp%)

  Possible reasons for this increase in the collection period

You are the CEO of a company that has hired a new sales manager in the last year. The company’s sales have increased by 60 percent during that time; however, the company’s average collection period has increase from twelve days to thirty-five days. I..

  Restructuring charges as they attempt to reduce costs

Many companies incur restructuring charges as they attempt to reduce costs. They often label these items in the income statement as “non-recurring” charges to suggest that they are isolated events which are unlikely to occur in future periods. What i..

  Explain data displayed in the financial market

The following data are displayed in the financial market: Spot price on Walmart stock = $59; Expiration of the futures contract = one year; Interest rate = 6 percent per year;

  What is a short squeeze

What is a short squeeze? When do short sellers get squeezed? What do short sellers do when they get squeezed? If all short sellers behave the same, does that make things better or worse for short sellers? Why?

  Assume market interest rates have risen substantially

Assume market interest rates have risen substantially in the 5 years since an investor purchased Treasury bonds that were offering a 6% return over their 15-year life. If the investor sells now he or she is likely to realize a total return that is:

  Discuss importance of budgeting for these types of companies

Consider companies that have very distinct seasonal variations. Some companies may have periods of very little to no sales. Discuss the importance of budgeting for these types of companies.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd