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Fiesta28 [93]
3 years ago
13

John Q. Investor manages an equity portfolio with a market value of $3,000,000. The portfolio beta is 1.6. John Q. finds this so

mewhat overly aggressive for the client's risk profile and sells 25 DJIA futures contracts. The contract is defined as $10 times index and is currently trading at 15379. John Q. anticipates that this hedge will reduce the portfolio beta to ___?
Business
1 answer:
Lubov Fominskaja [6]3 years ago
7 0

Answer:

Portfolio Beta  = 1.2815

Explanation:

given data

market value = $3,000,000

portfolio beta = 1.6

sells = 25

times index = $10

currently trading = 15379

to find out

anticipates that this hedge will reduce the portfolio beta to

solution

we get number of contract to sell is here

number of contract to sell = Portfolio Beta × \frac{Portfolio\ value}{index\ value\ * multiplier}      ......................1

put here value we get

25 = Portfolio Beta × \frac{3,000,000}{15379 * 10}

solve it we get

Portfolio Beta  = 1.2815

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<u>Answer:</u>

Fatima's statement that she intends to continue in her job in spite of her dissatisfaction makes you think that Fatima will likely experience​ "Cognitive Dissonance".

<u>Explanation:</u>

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3 years ago
ranfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,0
Snowcat [4.5K]

Answer:

If discontinued, then their operating income will decrease by 168,800

It is a better deal to continue the backpack division active.

Explanation:

sales                  960,000

variable cost    (475,000)

contribution      485,000

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loss                     (42,000)

if Dropped

40% of fixed cost are unavoidable

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Two ways in which best bank can adapt to the challenges of the macro environment​
cupoosta [38]

Answer:

Mergers or Information Management

Explanation:

Mergers-In order to respond to certain challenges, businesses may choose to merge with another business. The new business will have a larger market share than either of the original businesses did.

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Information must be managed efficiently and a system must be in place so that the relevant staff can easily access it.

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I hope my answer helps you

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Empirical Question is a question that can be answered by observing and analyzing the world as it is known:
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