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  3. on october 23 an investor holds 80,000 shares of a

On October 23 an investor holds 80,000 shares of a certain stock. The market price...

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Finance

  1. On October 23 an investor holds 80,000 shares of a certain stock. The market price is $12 per share. The investor wants to double the market exposure of her shares over the next month and decides to use the December S&P/TSX 60 index futures contract. The current level of the index is 700 and one contract is for the delivery of $200 times the index. The beta of the stock is 0.5.
  1. What strategy should the investor follow?
  2. The initial margin for the S&P/TSX 60 index futures contract is $6,000 per contract and the maintenance margin is $4,000 per contract. What change in the level of the S&P/TSX 60 index will trigger a margin call for the investor?

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