After a detailed analysis of the oil stock LGCY, you determine that it is overvalued, and you plan on shorting $10,000 of it. You would like to isolate your bet on the alpha of the stock, so you want to hedge out all of your exposure to the market and to the oil industry. LGCY has a market beta of 1.1, and an oil industry beta of 1.5.
XLE (an oil stock ETF) has a market beta of 0.8 and an oil industry beta of 1.6.
SPY has a market beta of 1 and an oil industry beta of 0.1.
How could you use XLE and SPY to reduce your exposure to both risk factors to 0? If your portfolio was made up of just these three assets, what would your final position sizes be?

Milden company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. as an aid in planning, the company has decided to start using a contribution format income statement. to have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: cost cost formula cost of good sold $35 per unit sold advertising expense $210,000 per quarter sales commissions 6% of sales shipping expense ? administrative salaries $145,000 per quarter insurance expense $9,000 per quarter depreciation expense $76,000 per quarter management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. units sold and the related shipping expense over the last eight quarters follow: quarter units sold shipping expense year 1: first 10,000 $ 119,000 second 16,000 $ 175,000 third 18,000 $ 190,000 fourth 15,000 $ 164,000 year 2: first 11,000 $ 130,000 second 17,000 $ 185,000 third 20,000 $ 210,000 fourth 13,000 $ 147,000 milden company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter. required: 1. using the high-low method, estimate a cost formula for shipping expe