Given: Portfolio - $1 billion

Given: Forward Contract - $1 billion, todays index (spot) price is 100, forward contract price 1 year from now is 95.

Given: Assume that your portfolio and the forward contracts have a Beta of 0 with the market.

- Considering the portfolio and forward contract above, how would you attempt to protect your portfolio against a decline in returns over the next year?

- How successful would you be if the market declines by 10%?