Question 25 20 pts a) A manager has a stock portfolio worth $3,000,000 and has a beta of 1.4. In order to completely hedge the portfolio, he decides to trade S&P 500 futures contracts. Each contract is worth $200 per index point. The S&P 500 index is currently at 1,500. He recommends selling 8 contracts. Answer the following questions: (Show the calculations to get the full points) 0) Do you think that his suggestion is a good one? why or why not? (5 pts) #) How many contracts do you suggest buying or selling? (5 pts) b) The option price of Independence & Co, stock is $100. Its March options are about to expire. The current market price of the stock is $100 and the market expects that the price will be up by $5 by the end of March. Answer the following questions (Show the calculations to get the full points) 1) Suppose you are the buyer of their call option. Shall you exercise the options if the price increase forecast is right? (5 pts) m) Suppose you are the buyer of their put option, Shall you exercise the options if the price increase forecast is right? (5 pts) Edit Format Table 12pt Paragraph BI er tv O