Currently, a mutual fund manager wishes to hedge a portfolio that has a market value of $6,250,000 over the next three months using the S&P500 index futures with six months to maturity. The beta of the mutual fund portfolio is 1.50. The index futures price is 2,500. One index futures contract is on $250 times the index level. Please answer the following questions:
(1) What is the meaning of beta?
(2) What position (long or short) should the manger take? Please explain.
(3) How many contracts in the index futures contracts should the manager take to hedge the exposure to the stock market?