You Hold a Stock Portfolio Worth $15 Million with a Beta

question 48

Multiple Choice

You hold a stock portfolio worth $15 million with a beta of 1.05.You would like to lower the beta to 0.90 using S&P 500 futures,which have a price of 460.20 and a multiplier of 250.What transaction should you do? Round off to the nearest whole contract.

• A)sell 130 contracts
• B)sell 9,778 contracts
• C)sell 20 contracts
• D)buy 50,000 contracts
• E)sell 50,000 contracts

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Definitions:

Tuberculin Skin Test

A diagnostic tool for tuberculosis where a small amount of tuberculin is injected under the skin, and the reaction is measured to determine exposure to TB bacteria.

Intradermal

Pertaining to being within or between the layers of the skin.

Sharps Container

A specially designed container used to safely dispose of needles, blades, and other sharp medical instruments.

Upper

Typically refers to a stimulating substance, but in general use, it can describe anything positioned at a higher level or location.