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The Dow Jones futures contract is on $10 times the index. Currently, the Dow Jones index...

The Dow Jones futures contract is on $10 times the index. Currently, the Dow Jones index is 25,740. Beta (b) of the Dow Jones is currently 0.95.

Part a. Construct a hedge on a portfolio that is identical to the Dow Jones which is currently worth $75,500,000. The hedge position is for an individual who owns the portfolio.

Part b. Calculate what position would be needed to change the portfolio’s b (beta) to 1.5.

Part c. Calculate what position would be needed to change the portfolio’s b (beta) to 2.5.

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