It is July 16. A company has a portfolio of stocks worth $100 million. The beta of

Question:

It is July 16. A company has a of worth $100 million. The beta of the is 1.2. The company would like to use the CME December futures contract on the S&P 500 to change the beta of the to 0.5 during the period July 16 to November 16. The index is currently 1,000, and each contract is on $250 times the index.
a) What position should the company take?
b) Suppose that the company changes its mind and decides to increase the beta of the from 1.2 to 1.5. What position in futures contracts should it take?
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...