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  3. 2: a company has $30 million portfolio with a = 1:

2: A company has $30 million portfolio with a = 1:4: It decides to use...

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Accounting

2: A company has $30 million portfolio with a = 1:4: It decides to use futures contracts on theS&P500 to hedge its risk. The index futures is currently 1160: Each contract is for delivery of $250times the index.

(a) Find the hedge (the number of contracts) that minimizes risk. (b) How does the company reduce the of its portfolio to 0:6?

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