USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 42

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider a portfolio manager with a $20,500,000 equity portfolio under management. The manager wishes to hedge against a decline in share values using stock index futures. Currently a stock index future is priced at 1250 and has a multiplier of 250. The portfolio beta is 1.25.
-Refer to Exhibit 15.10. Assume that a month later the equity portfolio has a market value of $20,000,000 and the stock index future is priced at 1150 with a multiplier of 250. Calculate the profit on the equity position.

• A) $100,000
• B) -$200,000
• C) $600,000
• D) -$500,000
• E) $400,000

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Definitions:

Obedience

Compliance with an order, request, or law, or submission to another's authority.

Small Groups

A term describing units of interacting individuals, often characterized by a relatively limited size which allows for more personal interaction and shared objectives.

Negative Reactions

Responses or feedbacks that express disapproval, dissatisfaction, or adverse feelings towards something.

Milgram Studies

A series of social psychology experiments conducted by Stanley Milgram, which focused on obedience to authority figures and the conflict between obedience to authority and personal conscience.