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A company has $20 million portfolio with beta of 0.8. It would like to use futures contracts on the S&P 500 to hedge its risk.

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A company has $20 million portfolio with beta of 0.8. It would like to use futures contracts on the S&P 500 to hedge its risk. The index is currently standing at 1050, and each contract is for delivery of $250 per index points. What is the hedge that minimises its risk? What should the company do if it wants to reduce the beta of the portfolio to 0.2

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