Calculate the profit on the stock and the futures

Assignment Help Finance Basics

Reference no: EM13771832

Suppose you purchased 500 shares of the Fidelity Nasdaq Composite Index Tracking Stock (ticker = ONEQ) on January 1 at $50 each. On March 1 the price reached $60, and you became nervous at having earned a large return in two months. Rather than sell your shares, you decide to hedge by selling June E-mini NASDAQ composite futures contracts (multiplier = 20), which settled at 1,508 on March 1. Since the tracking stock and futures are on the same asset, the beta is 1 and the hedge ratio is: HR = INT(((500*60) / (20*1,508))*1) = 1 When the contract settles in June, the ONEQ shares are selling for $45 and the futures for 1,105. Calculate the profit on the stock and the futures from March 1 to the settle day in June

Reference no: EM13771832

Questions Cloud

How many threads will you create to perform the input : Given: A system with two dual-core processors has four processors available for scheduling. A CPU-intensive application is running on this system. All input is performed at program start-up, when a single file must be opened. Similarly, all output is..

How would you use different types of software we discussed : How would you use the different types of SOFTWARE we discussed? Are some tools better for some uses than others? Be specific and give an example or two.

Issues related to texass new voting laws : Discuss whether or not you believe Attorney General Eric Holder should have challenge the voting laws in the state of Texasenacted after the Supreme Court struck down a key provision of the Voting Rights Act. Analyze at least 2 keys issues relate..

Gamut of mobile devices and bluetooth accessories : Invented by telecom vendor Ericsson in 1994, Bluetooth is a popular wireless technology standard for exchanging data over short distances. Bluetooth uses a packet-based protocol with a master-slave structure; one master may communicate with up to sev..

Calculate the profit on the stock and the futures : Calculate the profit on the stock and the futures from March 1 to the settle day in June

Reducing the negative environmental impacts : In order to reduce the negative environmental impacts of an ever growing human population and increasing demands for energy as technological advances continue, individual countries, states, cities and even households have the opportunity to shift ..

Users complain about slow network access : Business uses all hubs. Users complain about slow network access. Write a business case memo to the owner justifying the purchase of switches to replace the hubs. 2pages

Factors influence the magnitude of the coriolis effect : Why are hygroscopic nuclei important?

Lasa-organizational design and culture : Many companies find they are forced to remodel their traditional hierarchical structures, which were originally built around functional specialization and centralized authority, to compete in today's marketplace.

User Account

All Pages