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svetoff [14.1K]
3 years ago
5

On July 1, an investor holds 50,000 shares of a certain stock. The market price is $30 per share. The investor is interested in

hedging against movements in the market over the next month and decides to use an index futures contract. The index futures price is currently 1,500 and one contract is for delivery of $50 times the index. The beta of the stock is 1.3. What strategy should the investor follow?
Business
1 answer:
Yakvenalex [24]3 years ago
5 0

Answer:

The strategy the investor should follow is to short 26 contracts of September Mini S&P 500 futures.

Explanation:

Provided information;

Amount of shares of a certain stock =50,000

The market value per share = $30

Portfolio value= P = 50,000 × 30 = $1,500,000

Beta of stock  β  = 1.3

current Index futures price = 1,500

Multiplier = $50

Futures Value A = 1,500 × 50 = $75,000

The formula used in calculating the number of contracts =

Number of contracts N =  (β  ×  P) ÷ Future values

N = (1.3 × $1500000) ÷ $75000

N = $1950000 ÷ $75000

Number of contracts N = 26

The strategy the investor should follow is to short 26 contracts of September Mini S&P 500 futures.

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Answer:

Product market expansion grid

Explanation:

Product market expansion grid -  

It is used to plan for the company , when the company is indeed of expanding , is referred to as Product market expansion grid .  

The strategy or information required for the company to increase sale of the goods and services or introducing a new product in the upcoming market , uses this plan.  

Hence , from the given information of the question,

The correct term is  Product market expansion grid .

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3 years ago
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Answer: c. can be voided based upon fraud in the inducement .

Explanation:

Brad knew exactly what kind of stone it was that Andrew had and yet proceeded to lie about it in order to induce a sale at a much lower price than the actual worth of the jewel .

The contract is therefore voidable because the Brad committed fraud by lying and obtaining the diamond at $50 under false pretenses. Andrew should therefore drag him to the Courts of law to face justice.

6 0
2 years ago
Public policies a. may be able to improve either economic efficiency or equality. b. may be able to improve economic efficiency
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Answer:

A. May be able to improve either economic efficiency or equality.

Explanation:

Public policies: These are the government's policies meant for the public´s benefit and it is tailored to translate vision into action to execute planning and get the desired result. These policies are important to resolve public issues efficiently and effectively with equality. It should be formed under the laws and regulations of the state.

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5 0
2 years ago
MC Qu. 151 Using the information below for... Using the information below for Sundar Company; determine the total manufacturing
Sphinxa [80]

Answer:

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Explanation:

Given that,

Direct materials used = $ 20,500

Direct labor used = 26,000

Factory overhead = 47,600

Beginning work in process = 12,200

Ending work in process = 12,800

Manufacturing Cost = Direct Material + Direct Labor + Factory Overhead

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Manufacturing Cost = 94,100

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3 years ago
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the answer is D, demand for food is inelastic

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3 years ago
Read 2 more answers
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