As the manager of a large well diversified school endowment fund
As the manager of a large, well-diversified school endowment fund, you are actively considering the implementation of sophisticated derivative strategies to protect your fund's market value in the event of a substantial decline in the overall level of equity prices.
Your colleagues have suggested that you acquire either (1) a short position in an S&P 500 Index futures contract, or (2) a long position in an S&P index put option contract.
Explain how each of these derivative strategies would affect the risk and return of the resulting augmented endowment portfolio.

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help