5Q. On January 1, 2020 you are following the stock of Palantir which has a price of $23.40 and a beta of 1.50. Barring any change in the general level of stock prices, you expect the stock to appreciate about 20 percent by June 30, 2020. Your analysis of the market as a whole to decline by 9 percent in stock prices in general over the same period. Because stock has a beta of 1.50 this would bring the stock down by about 1.50*9=13.5 percent which will substantially offset 20 percent appreciation in the stock price. You decide to hedge the market effect by selling stock index future contract that is quoted at 444.60 with a a multiplier of $500 expiring on third Friday of December 2020. This December 2020 future contract stands at 404.59 as of June 30, 2020. Please note, as of June 30, 2020 the Palantir stock price is likely to be $24.92. A. Compute the number of Futures Contracts you need as of January 1, 2020? Would you buy or sell the futures contracts as of January 1, 2020? B. Compute profit/loss on the stock as of June 30, 2020? C. Compute profit/loss on the futures position as of June 30, 2020? D. Compute overall profit/loss and the rate of return as of June 30, 2020? 5Q. On January 1, 2020 you are following the stock of Palantir which has a price of $23.40 and a beta of 1.50. Barring any change in the general level of stock prices, you expect the stock to appreciate about 20 percent by June 30, 2020. Your analysis of the market as a whole to decline by 9 percent in stock prices in general over the same period. Because stock has a beta of 1.50 this would bring the stock down by about 1.50*9=13.5 percent which will substantially offset 20 percent appreciation in the stock price. You decide to hedge the market effect by selling stock index future contract that is quoted at 444.60 with a a multiplier of $500 expiring on third Friday of December 2020. This December 2020 future contract stands at 404.59 as of June 30, 2020. Please note, as of June 30, 2020 the Palantir stock price is likely to be $24.92. A. Compute the number of Futures Contracts you need as of January 1, 2020? Would you buy or sell the futures contracts as of January 1, 2020? B. Compute profit/loss on the stock as of June 30, 2020? C. Compute profit/loss on the futures position as of June 30, 2020? D. Compute overall profit/loss and the rate of return as of June 30, 2020