Exhibit 21.8 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 67

Multiple Choice

Exhibit 21.8
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider a portfolio manager with a $20,500,000 equity portfolio under management. The manager wishes to hedge against a decline in share values using stock index futures. Currently a stock index future is priced at 1250 and has a multiplier of 250. The portfolio beta is 1.25.
-Refer to Exhibit 21.8. Calculate the overall profit.

• A)$1,550,000
• B)-$2,000,000
• C)$2,050,000
• D)-$5,000,000
• E)$2,400,000

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Definitions:

Transferor

An individual or entity that transfers its rights or properties to another.

Complete Chain

A concept referring to a comprehensive series of connected events, processes, or components, often seen in supply chain management.

Authorized Indorsements

Pertains to the legally approved signatures or endorsements on documents, especially checks or negotiable instruments, that authorize their use or transfer.

Illegality

The state or condition of being contrary to the law or violating legal norms or provisions.