Ou manage a portfolio worth $19.5 million, currently all invested in equities, and believe that the market is on the verge of a big but short-lived downturn. you would move your portfolio temporarily into t-bills, but you do not want to incur the transaction costs of liquidating and reestablishing your equity position. instead, you decide to temporarily hedge your equity holdings with e-mini s& p 500 index futures contracts. a. should you be long or short the contracts?

After graduation, you plan to work for dynamo corporation for 12 years and then start your own business. you expect to save and deposit $7,500 a year for the first 6 years (t = 1 through t = 6) and $15,000 annually for the following 6 years (t = 7 through t = 12). the first deposit will be made a year from today. in addition, your grandfather just gave you a $32,500 graduation gift which you will deposit immediately (t = 0). if the account earns 9% compounded annually, how much will you have when you start your business 12 years from now?