You manage a

$20.5

million portfolio, currently all invested in equities, and believe that the market is on the verge of a big but shortlived downturn. You would move your portfolio temporarily into T-bills, but you do not want to incur the transaction costs of liquidating and reestablishing your equity position. Instead, you decide to temporarily hedge your equity holdings with E-mini S&P 500 index futures contracts.\ a. Should you be long or short the contracts?\ Long\ Short\ b. If your equity holdings are invested in a market-index fund, into how many contracts should you enter? The S&P 500 index is now at

$4100

and the contract multiplier is 50 .\ Number of contracts

,vdots.dotsdotsdotsdotsdotsdotsdotsdots

\ c. How many contracts should you enter into if the beta of your portfolio is 0.6 ?\ Number of contracts

You manage a $20.5 million portfolio, currently all invested in equities, and believe that the market is on the verge of a big but shortlived downturn. You would move your portfolio temporarily into T-bills, but you do not want to incur the transaction costs of liquidating and reestablishing your equity position. Instead, you decide to temporarily hedge your equity holdings with E-mini S\&P 500 index futures contracts. a. Should you be long or short the contracts? Long Short b. If your equity holdings are invested in a market-index fund, into how many contracts should you enter? The S\&P 500 index is now at $4100 and the contract multiplier is 50 . c. How many contracts should you enter into if the beta of your portfolio is 0.6