You Own a Portfolio That Is Valued at $6

question 37

Multiple Choice

You own a portfolio that is valued at $6.4 million and has a beta of 1.27. You would like to create a riskless portfolio by hedging with S&P 500 futures contracts. The contract size is $250 times the index level. How many futures contracts are needed if the current S&P 500 index is 1414?

• A)short 16 contracts
• B)short 18 contracts
• C)short 23 contracts
• D)long 18 contracts
• E)long 23 contracts

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Definitions:

Projective

Projective refers to psychological tests or techniques that encourage individuals to project their thoughts, feelings, and perceptions onto ambiguous stimuli, revealing hidden aspects of their personality.

Millon Index

A psychological assessment tool developed by Theodore Millon, used for personality assessment and diagnosing personality disorders.

Personality Styles

Characteristic patterns of thinking, feeling, and behaving that differentiate individuals from one another.

Extroversion Styles

Variations in the way individuals exhibit extroversion, including sociability, assertiveness, and enthusiasm.