A fund manager has a portfolio worth $50 million with a beta of 0.87. The manager is concerned about the performance of the market over the next two months and plans to use three-month futures contracts on a well-diversified index to hedge its risk. The current index level is 1, 250. one contract is on 250 times the index, the risk-free rate is 6% per annum, and the dividend yield on the index is 3% per annum. The current three-month futures price is 1, 259 What position should the fund manager take to hedge exposure to the market over the next two months?
Calculate the effect of your strategy on the fund manager's returns if the index in two months is 1.000, 1.100, 1, 200, 1, 300, and 1.400. Assume that the one-month futures price is 0.25% higher than the index level at this time.

Areal estate agent is considering changing her cell phone plan. there are three plans to choose from, all of which involve a monthly service charge of $20. plan a has a cost of $.42 a minute for daytime calls and $.17 a minute for evening calls. plan b has a charge of $.52 a minute for daytime calls and $.15 a minute for evening calls. plan c has a flat rate of $80 with 275 minutes of calls allowed per month and a charge of $.38 per minute beyond that, day or evening.a. determine the total charge under each plan for this case: 150 minutes of day calls and 70 minutes of evening calls in a month. (do not round intermediate calculations. round your answer to 2 decimal places. omit the "$" sign in your response.)c. if the agent will use the service for daytime calls, over what range of call minutes will each plan be optimal? (round each answer to the nearest whole number.include the indifference point itself in each answer.)d. suppose that the agent expects both daytime and evening calls. at what point (i.e., percentage of total call minutes used for daytime calls) would she be indifferent between plans a and b?