Suppose we hold $1,000 index equity investment. We want to hold the equity investment. Meanwhile, we want to hedge our risks by entering a 6-month forward contract/

Suppose the forward price is 500, and the Index is 500 right now. By the expiration of the forward (i.e. 6-months later), the index goes up to 600.

(1) In order to hedge, should you long or short the forward? The right answer is you should " " the forward. (note: your answer should be either "long" or "short")

(2) What is the total profit (or loss), that combines your equity investment and the hedging position using the forward? The total profit (or loss) should be " " (note:your answer should be a number).

answer the question in " "

Question

Suppose we hold $1,000 index equity investment. We want to hold the equity investment. Meanwhile, we want to hedge our risks by entering a 6-month forward contract/

Suppose the forward price is 500, and the Index is 500 right now. By the expiration of the forward (i.e. 6-months later), the index goes up to 600.

(1) In order to hedge, should you long or short the forward? The right answer is you should " " the forward. (note: your answer should be either "long" or "short")

(2) What is the total profit (or loss), that combines your equity investment and the hedging position using the forward? The total profit (or loss) should be " " (note:your answer should be a number).

answer the question in " "

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Suppose we hold $1,000 index equity investment. We want to hold the equity investment. Meanwhile, we want to hedge our risks by entering a 6-month

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