You Are Given the Following Information About a Portfolio You

question 26

Multiple Choice

You are given the following information about a portfolio you are to manage.For the long term, you are bullish, but you think the market may fall over the next month. For a 75-point drop in the S&P 500, by how much does the futures position change?

• A)$200,000
• B)$50,000
• C)$250,000
• D)$500,000
• E)$18,750

---

Definitions:

Variable Interest Entity

A legal entity in which an investor holds a controlling interest due to contractual agreements rather than owning a majority of voting rights.

Residual Profits

The earnings that remain after deducting all costs, including the cost of capital, from revenues.

Debt Guarantee

An arrangement where a third party promises to assume the debt obligation of a borrower if that borrower defaults.

Investment Account

An account held by an individual or entity with a financial institution for the purpose of trading or holding investments.