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A fund manager hedges her equity portfolio by selling FTSE 100 Index futures. Which one of these
is not compatible with this decision? The manager A. is protecting the portfolio value against falling
share prices. B. is selling because she wants to benefit from falling prices to offset the fall in the
value of her portfolio. C. Is selling because she is speculating that share prices will fall. D. Knows
that the value of her portfolio is correlated with the FTSE 100 Index value.

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  • 1. A fund manager hedges her equity portfolio by selling FTSE 100 Index futures. Which one of these is not compatible with this decision? The manager A. is protecting the portfolio value against falling share prices. B. is selling because she wants to benefit from falling prices to offset the fall in the value of her portfolio. C. Is selling because she is speculating that share prices will fall. D. Knows that the value of her portfolio is correlated with the FTSE 100 Index value.