What is the hedge that minimizes risk

Assignment Help Basic Computer Science

Reference no: EM131404157

A company has a $20 million portfolio with a beta of 1.2. It would like to use futures contracts on the S&P 500 to hedge its risk. The index is currently standing at 1080, and each contract is for delivery of $250 times the index. What is the hedge that minimizes risk? What should the company do if it wants to reduce the beta of the portfolio to 0.6?

Reference no: EM131404157

Questions Cloud

Analyze the drive quality in health care : In your paper, be sure to support your ideas with examples and references from your research sources, such as books, articles, the Internet, or personal experience. Cite references in a Reference page at the end following APA format. As always fol..

What strategy should the investor follow : The investor is interested in hedging against movements in the market over the next month and decides to use the September Mini S&P 500 futures contract. The index is currently 1,500 and one contract is for delivery of 550 times the index. The bet..

Research one such reported incident prepare a report : Search the web for news on computer security breaches that occurred during April-August 2016. Research one such reported incident. Prepare a report focusing on what the problem was, how and why it occurred and what are the possible solutions.

What strategy should the beef producer follow : The producer wants to use the December live-cattle futures contracts to hedge its risk. Each contract is for the delivery of 40,000 pounds of cattle. What strategy should the beef producer follow?

What is the hedge that minimizes risk : What is the hedge that minimizes risk? What should the company do if it wants to reduce the beta of the portfolio to 0.6?

Discuss about the patient and employee satisfaction : Given that Elara healthcare aims at improving effectiveness and quality of healthcare, there is a need for measuring effectiveness and data analysis to enhance quality improvements.In order to do so, there is various effectiveness measuring techni..

What are the main skills of an it manager : IT manager's job purpose is to "Maintains information technology strategies by managing staff; researching and implementing technological strategic solutions." What are the main skills of an IT manager

What is the optimal hedge ratio for a three-month contract : What is the optimal hedge ratio for a three-month contract? What does it mean?

Explain what is meant by a perfect hedge : Explain what is meant by a perfect hedge. Does a perfect hedge always lead to a better outcome than an imperfect hedge? Explain your answer.

User Account

All Pages