Question

A client's portfolio with a beta of 1.50 is worth $1 million. The S&P 500 price...

A client's portfolio with a beta of 1.50 is worth $1 million. The S&P 500 price changes from $2,000 to $1,800. The price on the S&P 500 futures (each contract is on $50 times the index) changes from $2,400 to $2,100. What is the dollar value of gains/losses made on futures using the hedging strategy. (Calculate only the amount gained or lost through the change in the futures price)

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An investor's portfolio with a beta of 1.50 is worth $1 million. The S&P500 price changes...
An investor's portfolio with a beta of 1.50 is worth $1 million. The S&P500 price changes from $2000 to $1800. The price on the S&P500 futures (each contract is on $50 times the index) changes from $2400 to $2100. What is the dollar value of gains/losses made on futures using the hedging strategy. (Calculate only the amount gained or lost through the change in the futures price) (Round to the nearest whole dollar amount. Enter only the numeric portion of...
An investor's portfolio with a beta of 1.25 is worth $1 million. The current S&P500 price...
An investor's portfolio with a beta of 1.25 is worth $1 million. The current S&P500 price is $1500. The current futures price on the S&P500 (each contract is on $250 times the index) is $1800. Next period, the S&P500 is priced at $1250 and the futures price on the index is $1500. What is the final value of the portfolio after the hedging process? Enter numeric value without the '$' symbol.
An investor's portfolio with a beta of 1.25 is worth $1 million. The current S&P500 price...
An investor's portfolio with a beta of 1.25 is worth $1 million. The current S&P500 price is $1500. The current futures price on the S&P500 (each contract is on $250 times the index) is $1800. Next period, the S&P500 is priced at $1250 and the futures price on the index is $1500. What is the final value of the portfolio after the hedging process? Enter numeric value without the '$' symbol.
Suppose that a portfolio is worth $600 million. The beta of the portfolio is 1.5. The...
Suppose that a portfolio is worth $600 million. The beta of the portfolio is 1.5. The portfolio manager would like to use the CME December futures contract on the S&P 500 to change the beta of the portfolio to 0.5. The index is currently 2,400, and each contract is $250 times the index. 1. What is the future position required to reach this goal? 2.Long or short? 3.How many contracts?
It is February 16. A company has a portfolio of stocks worth $100 million. The beta...
It is February 16. A company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.3. The company would like to use the July futures contract on a stock index to change the beta of the portfolio to 0.5 during the period February 16 to June 16. The index futures price is 2,000, and each contract is on $250 times the index. a. What position should the company take in the futures contract in order...
A equity fund manager has a portfolio worth $100 million with a beta of 1.27. The...
A equity fund manager has a portfolio worth $100 million with a beta of 1.27. The current level of S&P 500 index is 2,650. The price of one- month S&P 500 futures contract is 2,680. One contract is on $250 times the index points.  What position should the fund manager take if she/he wants to change the portfolio to be a double- leveraged index ETF over the next month?
An investor owns a $250,000 equity portfolio with a beta of 1.25. The S&P 500 index...
An investor owns a $250,000 equity portfolio with a beta of 1.25. The S&P 500 index is currently 2,000, the risk-free interest rate is 4% per annum, and the dividend yield on the index is 2% per annum. (a) If the index increases to 2,200 over the next six months, what is the expected percentage return on the equity portfolio? (b) Futures contracts (for 100 times the index) are currently priced at 2,100. How could the investor hedge the portfolio...
A fund manager has a portfolio worth $100 million with a beta of 0.88. the manager...
A fund manager has a portfolio worth $100 million with a beta of 0.88. the manager is concerned about the performance of the market over the next 2 months and plans to use 3-month futurescontracts on the S&P 500 to hedge the risk. The current level of the index is 2600, one contract is on 250 times the index, the risk free rate is 3% per annum, and the dividend yield on the index is 2% per annum. (a) Calculate...
Ch 24: An investor's portfolio with a beta of 1.25 is worth $1 million. The current...
Ch 24: An investor's portfolio with a beta of 1.25 is worth $1 million. The current S&P500 price is $1500. The current price on the S&P500 futures (each contract is on $250 times the index) is $1800. How many futures contracts will the investor need and what position will he/she take to completely hedge away the market's impact on the portfolio? Short 3 shares of the S&P500 index Long 3 S&P500 futures contracts Short 3 S&P500 futures contracts Long 3...
An equity fund manager has a portfolio of stocks worth USD 170 million. The beta of...
An equity fund manager has a portfolio of stocks worth USD 170 million. The beta of the portfolio is 1.0. In early July, the fund manager would like to use September futures contract on the S&P 500 to change the beta of the portfolio to 2.0. The index futures price is 1,000 and each contract is on USD 250 times the index. Which of the following statements is most accurate? Group of answer choices The fund manager needs to long...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT