Futures contracts should be entered to minimize risk

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Reference no: EM132069756

A company has a $100 million portfolio with a beta of 1.12. It would like to hedge risk using futures contracts on the S&P 500. The index futures price is currently 1320 and each contract is for delivery of $250 times the index.

How many futures contracts should be entered to minimize risk?

How many long or short contracts should be entered if you wish to reduce the beta of this portfolio to .8?

How many long or short contracts should be entered if you wish to increase the beta of this portfolio to 1.5?

Reference no: EM132069756

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