You Want to Hedge a Stock Portfolio with a Value

question 50

Multiple Choice

You want to hedge a stock portfolio with a value of $325 million using a S&P 500 index futures contract that is currently quoted at 1,286.50. The multiplier of the contract is $250. If the beta of the portfolio is 1.15, how many futures contract are needed?

• A) 1,162
• B) 987
• C) 1,043
• D) 931
• E) 1,087

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Definitions:

Inflation

The rate at which the cost of goods and services goes up, thereby reducing the purchasing capacity.

Period

A length or portion of time.

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Individuals of working age who are without work, available to work, and actively seeking employment.

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Individuals in the workforce who have secured employment and are currently working.