Portfolio position can be hedged from overall stock market

Assignment Help Financial Management
Reference no: EM13805606

If the S&P contracts have a multiplier of $500 and your $2.0M hedge fund stock portfolio has a beta of 1.2, then your portfolio position can be hedged from overall stock market volatility for 3 months by selling how many S&P futures contracts beginning of the quarter? Assume the S&P index is at 1,200 and for simplicity; your portfolio pays no dividends.

Assume if your portfolio alpha is 4%. What would be your portfolio return if the stock market declines by 10% during the quarter? Explain your answer.

Reference no: EM13805606

Questions Cloud

Self employed certified public accountant : On December 31, 2009, Cathy Chen, a self employed certified public accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services. She had two employees: a bookkeeper and a clerical assis..
Short summary of the hendrick case study : Write a short summary of the Hendrick case study - It should cover the human factor errors made by the Hendrick flight crew which caused the accident.
Write a paper about how is sony still attracting people : Write a paper about How is Sony still attracting people?
What is the firms expected rate of return : Preston Inc.'s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return?
Portfolio position can be hedged from overall stock market : If the S&P contracts have a multiplier of $500 and your $2.0M hedge fund stock portfolio has a beta of 1.2, then your portfolio position can be hedged from overall stock market volatility for 3 months by selling how many S&P futures contracts beginni..
Examples of cross functional decision making : In a paper, review and define the most important operations functions and provide examples of cross functional decision making, operations process, supply chain management, strategies, new product designs, QFD, and modular designs.
Is the bond selling at a premium or discount and why : Calculate the price of the bond you have selected. Is the bond selling at a Premium or Discount and why?
Calculate the standard deviation in the anticipated return : James is considering whether to invest in a newly formed investment fund. The fund's investment objective is to acquire home mortgage securities at what hopes will be bargian prices. Based on these potential outcomes, what is your estimate of the exp..
The independent samples t-test, in statistics for managers : How does variability in the distribution of sample means compare to variability in a population based on individual scores?

Reviews

Write a Review

Financial Management Questions & Answers

  Market value and the face value of the zero-coupon bond

You will be paying $10,000 a year in education expenses at the end of the next two years. Currently the yield curve is flat at 8%. If you want to fully fund and immunize your obligation with a single issue of a zero-coupon bond, what maturity bond mu..

  Provide credit in financial markets outside their country

The most popular way for international expansion is for a local firm to acquire foreign companies. Explain why some financial institutions prefer to provide credit in financial markets outside their own country

  Describe the target capital structure

The last dividend paid by Marquette Inc. was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its ..

  What is the new exchange rate for the yen

The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 2%. The current exchange rate is $1 equal to 101 Japanese yen. If purchasing power parity condition is existed, what is the new exchange rate for the yen?

  E-business activities with the partners for ordering

Take your company from last week and look at the business partnerships you would develop to support your new adventure. The needs of your company will have a variety of types of partners according to the products or services offered by your company. ..

  Compute the yield to maturity one expects

Ryan Inc is expected to have its growth rate drop from 20% to 10% in 5 years. The last dividend was $3 and the discount rate is based on beta of 3, T bond rate of 5% and return of the market of 10%. First, find the value of Ryan Inc. Second, compute ..

  Undertaking a major investment

Company Omega is undertaking a major investment. It is expected to cost 1 million in initial investment at t = 0,  1 million at t = 1 and  1 million at t =2. The investment is expected to generate at the end of year t = 2 a dividend flow of 1.0 milli..

  What is the effective annual rate on such a student loan

The going rate on student loans is quoted as 8 percent APR. The terms of the loans call for monthly payments. (Interests are compounding every month.) What is the effective annual rate (EAR) on such a student loan?

  Influence risk levels in international business

List 3 of the Primary factors that influence risk levels in international business but not typically in domestic business.

  Landscaping service but lee refused to pay

Clarkson and Lee did not have a contract, but Clarkson completed extensive landscaping in Lee’s yard by mistake while Lee was away on vacation. Clarkson sent Lee a bill for the landscaping service but Lee refused to pay. Determine the likely result i..

  Q1 an s corporation is subject to the following taxa

q1. an s corporation is subject to the following tax.a. corporate income tax. b. built-in gains tax. c. accumulated

  Read the case on pricing and production decisions at

read the case on pricing and production decisions at poolvac. inc and answer the questions given below the case. use

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