Question: Please help me out 29. Index Futures - Reverse Working Mr. Ram was employed with ABC Portfolio Consultants. The work profile of Mr. Ram involves
Please help me out
29. Index Futures - Reverse Working Mr. Ram was employed with ABC Portfolio Consultants. The work profile of Mr. Ram involves advising the Clients about taking position in Future Market to obtain hedge in the position they are holding. Mr. Hari, their regular Client purchased 1,00,000 Shares of X Co. at a price of 22 and sold 50,000 Shares of A Co for 40 each having Beta 2. Ram advised Hari to take Long position in Index Future trading at 1,000 cach contract. Though Mr. Ram noted the name of A Co. along with its Beta Value during discussion with Mr. Hari, but forgot to record Beta Value of X Co. On next day Mr. Hari closed out his position when: (a) Share Price of X Co. dropped by 2% (b) Share Price of A Co appreciated by 3% (c) Index Future dropped by 1.5% Mr. Hari, informed Mr. Ram that he has made a loss of 1,14,500 due to the position taken. Since record of Mr. Ram was incomplete, he approached you to help him to find the number of Future Contract he advised Mr. Hari to be short to obtain a complete hedge and Beta Value of X Co. You are required to find these values. 29. Index Futures - Reverse Working Mr. Ram was employed with ABC Portfolio Consultants. The work profile of Mr. Ram involves advising the Clients about taking position in Future Market to obtain hedge in the position they are holding. Mr. Hari, their regular Client purchased 1,00,000 Shares of X Co. at a price of 22 and sold 50,000 Shares of A Co for 40 each having Beta 2. Ram advised Hari to take Long position in Index Future trading at 1,000 cach contract. Though Mr. Ram noted the name of A Co. along with its Beta Value during discussion with Mr. Hari, but forgot to record Beta Value of X Co. On next day Mr. Hari closed out his position when: (a) Share Price of X Co. dropped by 2% (b) Share Price of A Co appreciated by 3% (c) Index Future dropped by 1.5% Mr. Hari, informed Mr. Ram that he has made a loss of 1,14,500 due to the position taken. Since record of Mr. Ram was incomplete, he approached you to help him to find the number of Future Contract he advised Mr. Hari to be short to obtain a complete hedge and Beta Value of X Co. You are required to find these values
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