You manage a R500 million equity fund that invests in industrial shares. In three month’s time you anticipate a cash outflow of R130 million. Rather than run the risk of waiting, you decide to use the INDI 25 futures contract to hedge.
Calculate the number of futures contracts you will need to trade in order to hedge the R130 million cash outflow if the INDI 25 futures is quoted at 82 358.
Note that the INDI 25 futures contract has a multiplier of 10x and a beta of 1.2.

Answer rating: 100% (QA)

To hedge the R130 million cash outflow using the INDI 25 futures contract you ll need to calcu View the full answer