You are the manager of a hedge fund that specializes in investing in the health sector. You have 500 million dollar under management and your fund consistently outperform broader market indices. However, you are bearish on the stock market over the next two-three years, and you are concerned about market risk exposure. You would like to consider some strategies that help you hedge market risk exposures. Below is some basic information about your portfolio.

1) The beta of your portfolio with respect to the S&P500 index is 1.78 and the R² of the CAPM regression with S&P500 on the right-hand side is 0.56.

2) The beta of your portfolio with respect to the Russell2000 index is 1.02 and the R² of the CAPM regression with Russell2000 index return on the right-hand side is 0.78.

3) The current S&P500 index value is 2100, and the current Russell2000 index is 1250.

4) One S&P500 futures contact is $250 S&P500 index, and one Russell2000 mini futures is $100 Russell2000 index.

Questions:

1. Suppose you use S&P 500 futures contract to hedge your market risk exposure. Your should use ________ S&P 500 futures contracts (calculate the number of contracts that you should use. Round to the nearest integer.).

2. Suppose you use Russell2000 mini futures contract to hedge your market risk exposure. The number of Russell2000 mini futures contracts that you should use is ________ (please calculate the number of contracts that you should use and round to the nearest integer.).