A Trader Has a Portfolio Worth $5 Million That Mirrors

question 17

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 contract 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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