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A Company Has a $36 Million Portfolio with a Beta

question 5

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A company has a $36 million portfolio with a beta of 1.2.The futures price for a contract on an index is 900.Futures contracts on $250 times the index can be traded.What trade is necessary to increase beta to 1.8?


Definitions:

Scooter Assembly

The process of putting together the various components of a scooter to make it ready for sale or use.

Assembly Worker

An individual employed to construct various components into a final product in a manufacturing process.

Raw Materials Inventory Turnover

A measure of how frequently a company uses and replenishes its stock of raw materials within a specific period.

Raw Materials Used

Refers to the basic substances in their natural, modified, or semi-processed state used in manufacturing or production.

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