You Own an Equity Portfolio That Has a Value of $10,000

question 1

Multiple Choice

You own an equity portfolio that has a value of $10,000 and a beta of 1.2. The futures price per contract is currently $1,000. How many futures contracts do you need to sell to bring your equity portfolio's beta to a value of 1?

• A) 0.5
• B) 1.0
• C) 1.5
• D) 2.0

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Definitions:

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, showing how fixed costs per unit change with output levels.

Marginal Cost

The cost of producing one additional unit of a good or service, considering the variable costs involved.

Total Cost

The sum of all the expenses incurred in producing a good or service, including both fixed and variable costs.

Average Cost

The cost per unit of output, calculated by dividing the total cost of production by the number of units produced.