You Are Given the Following Information About a Portfolio You

question 3

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. $\begin{array}{lc} \text { Portfolio Value} &\$ \quad \text { 1million } \\ \text { Portfolio's Beta} &0.86\\ \text { Current S\&P500 value } &990\\ \text {Anticipated S\&P500 Value } &915\\\end{array}$


How many contracts should you buy or sell to hedge your position? Allow fractions of contracts in your answer.

• A) Sell 3.475
• B) Buy 3.475
• C) Sell 4.236
• D) Buy 4.236
• E) Sell 11.235

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Definitions:

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The male genital organ used for urination and, in humans, also for sexual reproduction, functioning as a conduit for sperm during sexual intercourse.