10. It is July 16. A company has a portfolio of stocks worth $25 million. The beta of the portfolio

is 1.2. The company would like to use the December futures contract on a stock index to change

beta of the portfolio to 0.5 during the period from July 16 to November 16. The index is

currently 2,000, and each contract is on $250 times the index.

1) What should the company do to change the beta to the target level?

2) Suppose that the company changes its mind and decides to increase the beta of the portfolio

from 1.2 to 1.5. What should the company do