Question 1 Explain how a portfolio manager can eliminate the systematic risk of his stock portfolio over the next month using futures on the S&P 500 index. What return does the manager expect on the hedged portfolio over the next month? What position in the S&P 500 futures should the manager take if he wants to reduce (rather than eliminate) the systematic risk of his stock portfolio by, e.g., 20% over the next month? [15 marks]