Question: Could someone please help me with this question? I am desperate 1. Suppose you are managing a stock portfolio worth $100 million, which tracks closely

Could someone please help me with this question? I am desperate

1. Suppose you are managing a stock portfolio worth $100 million, which tracks closely with the S&P 500. You fear that a decline is coming and wants to completely hedge the value of the portfolio over the next year. Assume the current index of the S&P 500 futures is 800, and the value of a futures contract= $250 the index.

a. How many futures contracts will you buy or sell?

b. Suppose next year, the S&P 500 index declines by 10% from 800 to 720. How much is the gain or loss on the portfolio? How much is the gain or loss on futures position? What is the net position?

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