Joyce is a fund manager at Excel International Investment Limited. Today, beginning of 2 0 2 3
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Joyce is a fund manager at Excel International Investment Limited. Today, beginning of Excel International holds a portfolio of stock funds including CoffeeBean. This portfolio had a value of $ million in today the value has increased by The recent political and economic uncertainty in Ukraine and Palestine is perceived to decline the value of the portfolio. Joyce suggests hedging the portfolio using an S&P stock index futures contract. The historical index in was points, today is points and one contract is for delivery of $ times the index. The beta of the stock portfolio is
a What strategy should the manager follow to hedge the portfolio against the index futures?
b What action should the manager take to reduce the beta of his portfolio to
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