I. You have invested in the stock-market (beta = I). Instead of selling, would like to use frtures contracts to remove all market nsk until January 202L The following are the prices of the e-mini S&P fttures corfracts: December 2020 Much 2021 June 2021 32356.75 If each contract for 50 x S&P price, answer the following: (a) Explain m detail die futures position you would take (note: you should identi$' the contact, direction (long/sh01t) and die number of contracts) (S points) The chosen contract to use as a hedge should be a short position because the underlying risk exposure is long. The contract chosen should be longer than January 2021 because an earlier contract (December) will not work (it would require rolling over the hedge at an unknown price for one month). Either the March or June contracts could be chosen with the plan to get out of the contract early. If March 2021 is chosen, amount of contract is = 11.9 contracts. So you should go short in 12 contracts for March 2021 and plan to get out (by taking the long position in 12 contracts) in January. (b) Ifthe mihal margin $5,000 and the maintenance margin is $4,000 per contract, set up a table showing the level in die margin account (mcludmg mm-gin calls) if the next daily closing prices on your chosen contract are 3400, 3450, 3430, 3410, 3390. (8 pomts) (Note: you can show results for I contract or the number of contracts in part (a)) Futures Time Price 3359.50 3410 Daily Unadjusted Mar:in 7,000 Margin Call Adjus ted M argin (Note: Cash flow in margin = sooo + + 2500-8000 - -1525)