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Tom Corser is the manager of the $140,000,000 Intrepid Growth Fund. Corser’s long-term view of the equity market is negative, and as a result, his portfolio is allocated defensively with a beta of 0.85. Despite his negative long-term outlook, Corser thinks the market is temporarily mispriced, and could rise significantly over the next few weeks. Corser has implemented tactical asset allocation measures in his fund sporadically over the years, and thinks now is another time to do so. Because he likes his long-term holdings, he decides to use a futures overlay rather than trading assets to implement his view of the market. Corser decides he wants to increase the beta of his portfolio to 1.25. The appropriate futures contract has a beta of 1.03 and the total futures price is $310,000. What is the appropriate tactical allocation strategy for Corser to accomplish his objective? A. Buy 373 equity futures contracts. B. Buy 175 equity futures contracts. C. Sell 175 equity futures contracts. |