Use in designing your cross-hedge strategy

Assignment Help Financial Management
Reference no: EM131618127

You have been assigned to implement a three-month hedge for a stock mutual fund portfolio that primarily invests in medium-sized companies. The mutual fund has a beta of 1.64 measured relative to the S&P Midcap 400, and the net asset value of the fund is $204 million.

Should you be long or short in the Midcap 400 futures contracts?

The Midcap 400 Index is at 671 and its futures contract size is 500 times the index, determine the appropriate number of contracts to use in designing your cross-hedge strategy. (Round your answer to the nearest whole number.)

Reference no: EM131618127

Questions Cloud

What is the component cost for coogly preferred stock : Coogly has outstanding preferred stock That pays a dividend of $4 per share and sells for $82 per share, What is the component cost for Coogly's preferred stock
Summary of a data set on the income of residents : Consider the following summary of a data set on the income of residents of Sydney inthe 2015-2016 ?nancial year, measured in thousands of dollars
The third type of prevention is tertiary : The third type of prevention is tertiary and is for the patient who already diagnosed with the disease, symptomatic, and requires treatment.
Solve for the natural rate of unemployment : (a) What is the real wage, as determined by the price-setting equation? (b) Solve for the natural rate of unemployment.
Use in designing your cross-hedge strategy : determine the appropriate number of contracts to use in designing your cross-hedge strategy.
What program trading strategy would you recommend : What program trading strategy would you recommend?
Greater scrutiny and calls for transparency : 1. According to the Feinstein, how does the arms industry manage to avoid greater scrutiny and calls for transparency?
Introduction to population or problem : Examine how the policy can be used by the interprofessional team to ensure coordinated and comprehensive care for the specific population
What is the maximum price decline on the contract : What is the maximum price decline on the contract that you can sustain without getting a margin call?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the necessary billing efficiency

A small consulting engineering company bought an office building for $910,000. The company has eleven engineers and eight support staff. Monthly expenses for for salaries, utilities, grounds maintenance, etc., are $108,000. Use an average billing rat..

  Determine required rate of return

Try to determine the required rate of return on Tilden Woods Corporation’s common stock.

  Connection with the average maturity of the obligations

As one of several advisors to the U.S. Secretary of the Treasury, you have been asked to submit a memo in connection with the average maturity of the obligations of the federal government. The basic premise is that the average maturity is far too sho..

  Find the expected rate of inflation in both countries

explain how do we find the expected rate of inflation in both countries to find the difference.

  Social security with a different social insurance program

Does Social Security provide much benefit in terms of consumption smoothing over the retirement decision?- Contrast Social Security with a different social insurance program.

  Calculate the portfolio expected return

Bankers Corp has a very conservative Beta of .7, while Biotech Corp has a Beta of 2.1. Given that the T-bill rate is 5%, and the market is expected to return 15%, what is the expected return of Bankers Corp, Biotech Corp, and a portfolio composed of ..

  Corporation and partnership producing same goods

Under what circumstances might we see both corporation and partnership producing same goods-services in the light of these required before-tax rates of return?

  Coupon bonds making annual payments

Shinoda Corp. has 7 percent coupon bonds making annual payments with a YTM of 6.3 percent. The current yield on these bonds is 6.65 percent. How many years do these bonds have left until they mature?

  What is the value of the firm

You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of .3, and a tax rate of 30 percent. Assume a risk-free rate of 5 percent a..

  What is the bond yield to call

A 20 year corporate bond has a coupon rate of 9% paid semi annually, a par value of $1000 and a quoted price of 102. What is the bond yield to call if the bond is callable at $1100 after 3 years of call protection?

  What will adjusted EPS and DPS be

What will the adjusted EPS and DPS be? What would you expect the stock price to be?

  Economy suffered a significant decline just year prior

Because the economy suffered a significant decline just a year prior, there was uncertainty about the economy in general, and, very much affected by the economy, the demand for shipping and containers. Since he has not dealt with uncertainty regardin..

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