You have been assigned to implement a three$-$month hedge for a stock mutual fund portfolio that primarily invests in medium$-$sized companies. The mutual fund has a beta of $1\mathrm{.}67$ measured relative to the S&P Midcap $400,$ and the net asset value of the fund is $$207$ million.

Should you be long or short in the Midcap $400$ futures contracts?

multiple choice

Long

Short

Assuming the Midcap $400$ Index is at $673$ and its futures contract size is $500$ times the index, determine the appropriate number of contracts to use in designing your cross$-$hedge strategy.

Note: Do not round intermediate calculations. Round your answer to the nearest whole number.