Answer: 288 contracts

## Explanation To calculate the number of futures contracts needed to adjust portfolio beta, we use the formula: \[ N = \frac{(\beta_T - \beta_P) \times V_P}{F \times M} \] Where: - \(\beta_T\) = Target beta = 0.75 - \(\beta_P\) = Current portfolio beta = 1.1 - \(V_P\) = Portfolio value = USD 300,100,000 - \(F\) = Futures price = 1457 - \(M\) = Multiplier = 250 Substituting the values: \[ N = \frac{(0.75 - 1.1) \times 300,100,000}{1457 \times 250} \] \[ N = \frac{(-0.35) \times 300,100,000}{364,250} \] \[ N = \frac{-105,035,000}{364,250} \] \[ N = -288.3 \] The negative sign indicates we need to **sell** futures contracts. Therefore, we need to sell **288 contracts** to reduce the portfolio beta from 1.1 to 0.75. **Answer: A. 288 contracts**

Author: LeetQuiz .