Suppose today's Hang Seng Index is 22,000 points and you are holding 100,000 shares of Tracker Fund with HK$22 per share. The total wealth that you have is (100,000 shares of Tracker Fund x HK$22 per share = HK$2,200,000). Suppose tomorrow the HSI drops to 21,500 points and Tracker Fund will be HK$21.5 per share. 

Show numerically how you could form a hedge portfolio that contributes a positive return to your current wealth assuming no transaction cost.

Answer rating: 100% (QA)

Todays HSI is 22000 points You hold 100000 shares of Tracker Fund at HK22 per shar... View the full answer