A long hedger will ________ from an increase in the basis a short hedger will ________.
A)be hurt; be hurt
B)be hurt; profit
C)profit; be hurt
A short hedge is a simultaneous ________ position in the spot market and a ________ position in the futures market.
On 1 January you sold one April S&P 500 index futures contract at a futures price of 1300. If the April futures price is 1250 on 1 February, your profit would be ________ if you close your position. (The contract multiplier is 250.)
The current level of the S&P 500 is 1250. The dividend yield on the S&P 500 is 3%. The risk-free interest rate is 6%. The futures price quote for a contract on the S&P 500 due to expire 6 months from now should be ________.