You Own a Portfolio Which Is Valued at $10 Million

question 45

Multiple Choice

You own a portfolio which is valued at $10 million and which has a beta of 1.5.You would like to create a riskless portfolio by hedging using S&P 500 futures contracts.The contract size is $250 times the index level.How many futures contracts do you need to acquire if the current S&P 500 index is 1500?

• A) short 30 contracts
• B) short 40 contracts
• C) long 25 contracts
• D) long 30 contracts
• E) short 50 contracts

---

Definitions:

Communities of Practice

Communities of individuals united by a common interest or passion, who enhance their skills and knowledge by interacting regularly.

Enthusiasm

A feeling of energetic interest in a particular subject or activity and an eagerness to be involved in it.

Content Marketing

An approach in marketing aimed at developing and circulating worthwhile, pertinent, and steady content to capture and keep the attention of a precisely identified group of viewers.

Valuable Information

Data or facts that are useful, beneficial, and relevant to a particular context or decision-making process.