Problemon july 1 an investor holds 50000 shares of a, Ask an Expert

Finance

Problem:

On July 1, an investor holds 50,000 shares of a certain stock. The market price is $29 per share. The investor is interested in hedging against movements in the market over the next month and decides to use the September Mini S&P 500 futures contract. The index futures price is 1,714 and one contract is for delivery of $50 times the index. The beta of the stock is 1.3.

Task:

Question: How many futures contract does he have to purchase? If it's a short position, report a negative number. Please provide all workings out and formulas.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146284

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