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posledela
3 years ago
8

A company has a $36 million portfolio with a beta of 1.2. The futures price for a contract on the S&P index is 900. Futures

contracts on $250 times the index can be traded. What trade is necessary to achieve the following. (Indicate the number of contracts that should be traded and whether the position is long or short.)
a. Eliminate all systematic risk in the portfolio
b. Reduce the beta to 0.9
c. Increase beta to 1.8
Business
1 answer:
Blizzard [7]3 years ago
7 0

Answer:

Explanation:

A:

Number of contracts required:

= (0-1.2)×36,000,000÷(900×$250)

= -192

Since negative value, short 192 contracts.

B:

= (0.9 - 1.2)×36,000,000÷(900×$250)

= -48

Since negative value, short 48 contracts.

C:

= (1.8 - 1.2)×36,000,000÷(900×$250)

= 96

Since positive value, long 48 contracts.

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Musya8 [376]

Answer:

C. the price effect would become a more significant consideration for each firm that makes automobiles.

Explanation:

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So, this explains the answer.

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4 years ago
When a banker records how many dollars each of his borrowers owes the bank, money is serving as a rev: 06_06_2018 Multiple Choic
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Answer:

The correct answer is the second option: unit of account.

Explanation:

To begin with, the particular concept of money, in the economics field, has a lot of application that can vary depending on wheter the use that person is going to give it to it. In the cases where the money is use in the accounts of the companies to keep the books in actual values of the day then the money has the function of acting as a unit of account in order to know how much is the amount that it has to be registered in the books and therefore that the banker is using the money as a unit of account for the bank.

6 0
3 years ago
Crystal owns a bookstore. A period of economic turmoil adds a great deal of uncertainty to her sales forecasts. She decides to h
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Answer:

True

Explanation:

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3 years ago
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3 years ago
The blurring of lines between the state and a special interest group in which a close alliance develops is called
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Answer:

a. co-optation

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