What is the meaning of beta

Assignment Help Financial Management
Reference no: EM131841071

Currently, a mutual fund manager wishes to hedge a portfolio that has a market value of $6,250,000 over the next three months using the S&P500 index futures with six months to maturity. The beta of the mutual fund portfolio is 1.50. The index futures price is 2,500. One index futures contract is on $250 times the index level. Please answer the following questions:

(1) What is the meaning of beta?

(2) What position (long or short) should the manger take? Please explain.

(3) How many contracts in the index futures contracts should the manager take to hedge the exposure to the stock market?

Reference no: EM131841071

Questions Cloud

What are advantage of using xml rather than binary encodings : What are the advantages and disadvantages of using XML rather than binary encodings?
Describe approval process that exist for proposed project : Inerview someone who works in a large organization, ask him or her to describe the approval process that exist for proposed new development projects.
Determine the net present value of the investment in machine : The company's required rate of return is 12%. (Ignore income taxes.) Determine the net present value of the investment in the machine
Characteristics of a well-designed storyboard : Describe some of the characteristics of a well-designed storyboard. Predict the impact that a poorly developed storyboard could have on a Website.
What is the meaning of beta : What is the meaning of beta? What position (long or short) should the manger take?
How many different combinations make with four or eight bits : How many different combinations can you make with four bits or eight bits (one byte)? Each combination can be used to represent a binary number.
Describe different fields of web design : Explain why web design is an important career. Describe different fields of web design.
Write a brief on each type of innovation is appreciated : Innovation means the action of developing an idea and actualize to improve or add value through customer experience.
Calculate the effective rate of interest in the six year : Calculate the effective rate of interest in the 6th year.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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