5. A company has a S50 million portfolio with a beta of 1.4. It would like to use futures contracts on a stock index to hedge its risk. The index futures is currently standing at 970, and each contract is for delivery of $250 times the index. What is the hedge that minimizes risk? What should the company do if it wants to reduce the beta of the portfolio to 0.9? Suppose that the Treasury bond futures price is 101-12. Which of the following four bonds is cheapest to deliver? 6. Price 125-05 142-15 115-31 144-02 Conversion Factor 1.2131 1.3792 1.1149 1.4026 Bond 4