Assume That You Manage an Equity Portfolio

question 33

Multiple Choice

Assume that you manage an equity portfolio. The portfolio beta is 1.15. You anticipate a decline in equity values and wish to hedge $500 million of the portfolio. Calculate the number of contracts you would need to hedge your position and indicate whether you would go short or long. Assume that the price of the S&P 500 futures contract is 1105 and the multiplier is 250.

• A) 2500 contracts short
• B) 1810 contracts short
• C) 1810 contracts long
• D) 2081 contracts short
• E) 2081 contracts long

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Definitions:

Fine Motor Skills

The ability to use small muscles, specifically in the hands and fingers, for tasks like writing, buttoning, and cutting, developing throughout early childhood.

Head Motions

Movements of the head that can be voluntary or involuntary, used in non-verbal communication or as part of physical activity.

Large Movements

Broad, impactful social, political, or cultural shifts that influence large populations or regions.

Fine Motor Skills

Fine motor skills involve the coordination of small muscles in movements—usually involving the synchronization of hands and fingers—with the eyes.