A Trader Has a Portfolio Worth $5 Million That Mirrors

question 10

Multiple Choice

A trader has a portfolio worth $5 million that mirrors the performance of a stock index.The stock index is currently 1,250.Futures contracts trade on the index with one contract being on 250 times the index.To remove market risk from the portfolio the trader should

• A) Buy 16 contracts
• B) Sell 16 contracts
• C) Buy 20 contracts
• D) Sell 20 contracts

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Definitions:

Dependent Variable

The variable in a study that is expected to change as a result of variations in the independent variable.

Administration

In research contexts, it often refers to the management, organization, and supervision of the processes and procedures involved in conducting a study.

Self-Reports

A method of data collection where individuals directly report their own behaviors, thoughts, or feelings, often through questionnaires or interviews.

Physiological Responses

The automatic reactions of the body to internal or external stimuli, such as changes in heart rate or hormone levels.