You are to use market information taken from WSJ and/or WSJ online that reflects closing prices from Tuesday, September 27.

Assume that you are a portfolio manager who holds 10,000 shares of each of the First 10 component stocks in the Dow Jones Industrial 30 index by numeric/alphabetical order [beginning with 3M Co. (MMM), then American Express (AXP), and on through Dow (DOW)].

A. Suppose that you have concerns over a potential bear market ensuing during the next two months or so and wish to completely hedge the equity risk in the portfolio. What action would you recommend using the December 2022 E-mini S&P 500 futures contract ?

B. Suppose instead that you have developed a long-term extremely bullish view and wish to raise your portfolio beta to say 1.40. What action would you recommend using the March 2023 E-mini S&P 500 futures contract?