QUESTION 3 B Aug 2023

Samson Ole Kina manages a family investment portfolio which initially consist of Sh.46 million of equities and
Sh.32 million of bonds. As a result of a change in family circumstances, the portfolio is rebalanced using the
transactions shown below:

Types of futures contracts Action Number of futures contracts to Price per futures contract
Buy/Sell (Sh.)
Equity futures contract Buy 42 160,000
Bond futures contract Sell 35 190,000

Three months after these transactions, the market value of the portfolio’s equities has increased by 3.00% and the
market value of its bonds has decreased by 2.40%. The prices of the equity and bond futures are now quoted at
Sh.165,000 and Sh.185,250 respectively.

Calculate the profit or loss on the portfolio over the past three months