A Company Has a $36 Million Portfolio with a Beta

question 5

Multiple Choice

A company has a $36 million portfolio with a beta of 1.2.The futures price for a contract on an index is 900.Futures contracts on $250 times the index can be traded.What trade is necessary to increase beta to 1.8?

• A) Long 192 contracts
• B) Short 192 contracts
• C) Long 96 contracts
• D) Short 96 contracts

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Definitions:

Self-paced

A learning or work method that allows individuals to control the speed at which they progress through content or tasks.

Thoughtful Concentration

The mental effort directed towards a specific topic or task with careful consideration.

Job Enlargement

The process of increasing the variety and number of tasks that an employee performs, aiming to add diversity to activities to reduce monotony and enhance job satisfaction.

Job Rotation

A work arrangement where employees rotate through a variety of positions within an organization to learn different jobs and gain a broader understanding of the business.