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

question 24

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.If you anticipate a cash inflow of $2 million next week,how many futures contracts should you buy or sell in order to mitigate the effect of this inflow on the portfolio's performance (rounded to the nearest integer) ?

• A) Sell 6 contracts
• B) Buy 6 contracts
• C) Sell 8 contracts
• D) Buy 8 contracts
• E) None of the above

---

Definitions:

Real Wages

Wages adjusted for inflation, representing the purchasing power of the income received by workers for their labor.

Wage Differentials

The variations in wage rates due to factors like occupation, industry, geographic location, or skills, affecting income distribution among workers.

Productivity

A measure of the efficiency of production, often quantified as the ratio of output to inputs in a manufacturing or production process.

Human Capital

The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community.