Which of the following will give him the hedge he desires (assuming that one futures contract = 100 shares)?

Section A (1 Mark)

Manoj owns five hundred shares of ABC Ltd. Around budget time, he gets uncomfortable with the price movements.

Which of the following will give him the hedge he desires (assuming that one futures contract = 100 shares)?
A . Buy 5 ABC Ltd. futures contracts
B . Sell 5 ABC Ltd. futures contracts
C . Sell 10 ABC Ltd. futures contracts
D . Buy 10 ABC Ltd futures contracts

View Answer

Answer: B