In July, a company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock index to change beta of the portfolio to 0.5 during the period July to November. The index is currently 1,000, and each contract is on $250 times the index. What position should the company take?     Short 280 contracts     Short 680 contracts     Long 280 contracts     Long  680 contracts

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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In July, a company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock index to change beta of the portfolio to 0.5 during the period July to November. The index is currently 1,000, and each contract is on $250 times the index. What position should the company take?

   

Short 280 contracts

   

Short 680 contracts

   

Long 280 contracts

   

Long  680 contracts

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