What position in futures contracts should it take

Assignment Help Civil Engineering

Reference no: EM131404165

It is July 16. A company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the CME December futures contract on the S&P 500 to change the beta of the portfolio to 0.5 during the period July 16 to November 16. The index is currently 1.000. and each contract is on $250 times the index.

a. What position should the company take?

b. Suppose that the company changes its mind and decides to increase the beta of the portfolio from 1.2 to 1.5. What position in futures contracts should it take?

Reference no: EM131404165

Questions Cloud

Probability that two individuals will win a free vacation : Using the hypergeometric distribution, determine the probability that exactly one of these two individuals will win a free vacation.

How can a healthcare provider improve their credit rating : What are the advantages and disadvantages to a taxpaying entity in issuing bonds as opposed to debt?What are the advantages and disadvantages to a taxable bond versus a tax-exempt bond?Why would a healthcare company use a private placement bond issue..

Design an economic policy solution to the problem : Select an economic problem mentioned in the textbook as the topic for a policy recommendation. Briefly describe the economic problem you have selected. Assess the impact the problem poses to society. Design an economic policy solution to the problem

Probability that there will be at least 3 republicans : A town council includes 10 Democrats and 15 Republicans.- What is the probability that there will be at least 3 Republicans on the committee?

What position in futures contracts should it take : Suppose that the company changes its mind and decides to increase the beta of the portfolio from 1.2 to 1.5. What position in futures contracts should it take?

How would you convince these physicians to change : Suppose you are in a leadership role in your hospital, and data reveal that the majority of physicians do not comply with evidence-based guidelines. Your job is to convince them to change. How will you do it? How would you analyze the problem? Wha..

Calculate a minimum variance hedge ratio : The following table gives data on monthly changes in the spot price and the futures price for c certain commodity. Use the data to calculate a minimum variance hedge ratio.

What is the probability that the shipment will be rejected : The inspector has been told to reject the shipment if, in a sample of 15 switches, 2 or more are defective. What is the probability that the shipment will be rejected?

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..

User Account

All Pages