w Question 13 (14 points) 6 A company has a $20 million portfolio with a beta of 1.2. It would like to use futures contracts on the S&P 500 to hedge its risk. The index futures price is currently 1080, and each contract is for delivery of $250 times the index. a) In order to minimizes risk, how many futures contracts does the firm need? 9 b) Should the company take a long or short future position? c) If the company wants to reduce the beta of the portfolio to 0.6, how many futures contracts does it need? Format V B I U 3 .. 5 Question 14 (16 points) A six-month forward contract on a certain stock is entered into when the stock price is $500. A dividend payment of $20 is expected after one month (all at the end of a month and the second dividend payment of $20 is expected after 4 month (ied at the end of 41 month The nusk-free anterest rate continuously compounded is 5a per annum for all maturities Serdecima ders $500 $20 $20 1 d 4 16 a) What are the current forward price and the initial value of the forward contract Forward price Nalue of contract b) Three months later, the price in the strehititetsrate per annual for all matunities What are the forward price and the value of the forward centrat cu are in the di Forward price