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Part A- Hedging using SPI200 futures contracts (10 marks) On Tuesday, 11 Apr 2023. Your...

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Finance

Part A- Hedging using SPI200 futures contracts (10 marks) On Tuesday, 11 Apr 2023. Your company has a reasonably broadly based portfolio of Australian shares valued on the date at $21,700,000. You will be required to seek to protect the value of that portfolio as the company intends to liquidate the portfolio. You will seek to do this by entering into a number of June 23 SPI200 future contracts as either a buyer or a seller. On Friday, 28th April, you will be notified that the portfolio of shares has been sold for $19200000. The decrease in the value of the portfolio was not as broadly as you have been told, as it was heavily dependent on a few companies that have performed poorly due to rising costs of material and labor shortage throughout April. You must now close your position and do so at the settlement price of the June 23 SPI200 futures contract. Provide a report how the hedge performed and explain why you could not achieve a perfect hedge

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