3. Futures price of S&P 500 is 1,200; One contract is on $250 times the index

Size of portfolio is $5 million; Beta of portfolio is 1.3

a) What position (Long or Short and #contracts) in futures contracts on the S&P 500 is necessary to hedge the portfolio?

b) If the portfolio manager decides to reduce risk / beta of the portfolio to 0.5 What position will you have?

c) Why to portfolio managers do Not hedge for a scenario when the stock prices go up for the portfolio.