In July, a company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock index to change beta of the portfolio to 0.5 during the period July to November. The index is currently 1,000, and each contract is on $250 times the index. What position should the company take? Short 280 contracts Short 680 contracts Long 280 contracts Long 680 contracts
In July, a company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock index to change beta of the portfolio to 0.5 during the period July to November. The index is currently 1,000, and each contract is on $250 times the index. What position should the company take? Short 280 contracts Short 680 contracts Long 280 contracts Long 680 contracts
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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In July, a company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock index to change beta of the portfolio to 0.5 during the period July to November. The index is currently 1,000, and each contract is on $250 times the index. What position should the company take?
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Short 280 contracts |
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Short 680 contracts |
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Long 280 contracts |
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Long 680 contracts |
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