Financial Risk Manager Part 1

Ultimate access to all questions.

Explanation:

First compute the value of the Apple position:

10{,}000 \times 350 = 3{,}500{,}000

Then compute the number of S&P 500 futures contracts needed:

N = \beta \times \frac{V_p}{V_f} = 1.14 \times \frac{3{,}500{,}000}{250 \times 1343} \approx 11.88

Rounding gives 12 contracts. Because the investor is hedging a long stock position, the correct hedge is to short 12 contracts.

Explanation:

First compute the value of the Apple position:

10{,}000 \times 350 = 3{,}500{,}000

Then compute the number of S&P 500 futures contracts needed:

N = \beta \times \frac{V_p}{V_f} = 1.14 \times \frac{3{,}500{,}000}{250 \times 1343} \approx 11.88

Rounding gives 12 contracts. Because the investor is hedging a long stock position, the correct hedge is to short 12 contracts.

Comments (0)

No comments yet.

Exam-Like

Community

MManit

Last updated: April 18, 2026 at 11:32

a) Long 10 contracts

33.3%

b) Short 10 contracts

33.3%

c) Long 12 contracts

d) Short 12 contracts

33.3%