Assume you are a portfolio manager who holds 10,000 shares of each of the LAST 10 component stocks in the Dow Jones Industrial index by numeric/alphabetical order (beginning with Nike (NKE) through Walgreen (WBA)). To help identify the ten stocks, see for example the following link: http://money.cnn.com/data/dow30/ Q. You have concerns over a potential bear market ensuing during the next 3 months or so and wish to completely hedge the equity risk in the portfolio. What action would you recommend using the June 2020 S&P 500 futures contract (use the 50 unit E-mini version rather than the 250 unit version).

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As a portfolio manager with concerns over a potential bear market in the next 3 months I would recom... View the full answer