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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 shares of the S&P500 Index
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