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  3. 7. you are a fund manager in charge of a 50-millio

7. You are a fund manager in charge of a 50-million-dollar portfolio. Your portfolio has...

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7. You are a fund manager in charge of a 50-million-dollar portfolio. Your portfolio has a beta of 1.25 relative to the S\&P500. The S\&P500 Index is currently 3,942. One S\&P500 futures contract has a value of $250 the index level. (1.00 points) (a) Assume you want to remove S\&P500 risk from your portfolio. Do you use long or short contracts? (b) What is the optimal number of S\&P500 futures contracts that you need to remove all S\&P500 risk from your portfolio

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