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What is the hedge that minimizes risk

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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 futures is currently standing at 1080, and each contract is for delivery of $250 times the index.

a) What is the hedge that minimizes risk?

b) What should the company do if it wants to reduce the beta of the portfolio to 0.6?

Reference no: EM132951358

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