Exhibit 21.9 Use the Information Below for the Following Problem(S)

question 85

Multiple Choice

Exhibit 21.9
Use the Information Below for the Following Problem(S)
As a portfolio manager, you are responsible for a $150 million portfolio, 90 percent of which is invested in equities, with a portfolio beta of 1.25. You are utilizing the S&P 500 as your passive benchmark. Currently the S&P 500 is valued at 1202. The value of the S&P 500 futures contract is equal to $250 times the value of the index. The beta of the futures contract is 1.0.
-Refer to Exhibit 21.9.How many contracts should you buy or sell in order to increase the portfolio beta to 1.30 (rounded to the nearest integer) ?

• A) Sell 70 contracts
• B) Buy 70 contracts
• C) Buy 87 contracts
• D) Buy 98 contracts
• E) None of the above

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Definitions:

Organizational Culture

Organizational culture comprises the values, beliefs, behaviors, and artifacts that contribute to the unique social and psychological environment of an organization.

Ethics Component

The ethics component involves the principles or standards governing the conduct of a person or members of a profession, emphasizing moral obligations and decisions.

Organizational Culture

A system of shared assumptions, values, and beliefs that governs how people behave in organizations.

Ethical Behavior

Acting in ways consistent with what society and individuals typically think are good values.