USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 45

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider a portfolio manager with a $10,000,000 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 1350 and has a multiplier of 250. The portfolio beta is 1.50.
-Refer to Exhibit 15.13. Assume that a month later the equity portfolio has a market value of $9,500,000 and the stock index future is priced at 1300 with a multiplier of 250. Calculate the profit on the equity position.

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

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Definitions:

Complicated Logistics

The complex processes and coordination required in the planning, implementing, and controlling of efficient, effective flow and storage of goods, services, and related information.

Global Strategy

A comprehensive plan developed by businesses to operate and compete on an international scale.

Reshoring

The practice of bringing manufacturing and services back to a country from overseas, driven by factors such as cost, quality, and supply chain reliability.

High Costs

Expenses that are significantly above average, often impacting profitability or affordability.