Q1. You are managing assets worth 3200 crores for a fund house. Today is 1 February and the expectations from the budget, scheduled for 28 February, are not so optimistic, this being the election year. Today the current price (Spot) of NSE Nifty50 index is 11,500. February and March futures expire on 26 February and 26 March respectively and are currently available for Rs. 11,525 and Rs. 11,600 respectively. Lot Size of Nifty Futures is 75. a) How can the fund protect itself against uncertainty generated due to the budget? (5 marks) b) Analyse the position of the portfolio in case of 5% rise in Nifty at expiry (7.5 marks) c) Analyse the position of the portfolio if there is a 4% fall in Nifty at expiry 17.5 marks) Q1. You are managing assets worth 3200 crores for a fund house. Today is 1 February and the expectations from the budget, scheduled for 28 February, are not so optimistic, this being the election year. Today the current price (Spot) of NSE Nifty50 index is 11,500. February and March futures expire on 26 February and 26 March respectively and are currently available for Rs. 11,525 and Rs. 11,600 respectively. Lot Size of Nifty Futures is 75. a) How can the fund protect itself against uncertainty generated due to the budget? (5 marks) b) Analyse the position of the portfolio in case of 5% rise in Nifty at expiry (7.5 marks) c) Analyse the position of the portfolio if there is a 4% fall in Nifty at expiry 17.5 marks)