The S&P 500 Index Price Is $925

question 21

Multiple Choice

The S&P 500 Index price is $925.28 and its annualized dividend yield is 1.40%.LIBOR is 4.2%.How many futures contracts will you need to hedge a $25 million portfolio with a beta of 0.9 for one year?

• A) 105
• B) 120
• C) 80
• D) 95

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Definitions:

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs - direct materials, direct labor, and overhead - in the cost of a product.

Special Price

A temporarily reduced price offered on goods or services, often used as a promotional or marketing strategy.

Net Income

The net income of a business following the subtraction of all costs and taxes from its earnings.

Absorption Costing

A costing method that integrates all expenses related to the manufacturing process, including direct materials, direct labor, and overhead costs, both variable and fixed, into the final product cost.