Active portfolio management apm wants to hedge its stock, Financial Management

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Active portfolio management apm wants to hedge its stock

1. If you buy an option to sell Treasury futures at 110, and at expiration the market price is 115,

A. the call will not be exercised.

B. the put will be exercised.

C. the put will not be exercised.

D. the call will be exercised.

2. Active Portfolio Management (APM) wants to hedge its stock portfolio with a stock index futures contract. The portfolio is worth $60 million and moves one-for-one with the S&P500 Index, which is currently at 1,000. What should APM do?

A. Sell 400 S&P 500 futures contracts

B. Buy 400 S&P 500 futures contracts

C. Sell 240 S&P 500 futures contracts

D. Buy 240 S&P 500 futures contracts

E. None of the above

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