Explanation
The investor's needs to sell futures contracts, as his current position is long. He needs to sell ($1,000,000 x (2.5-1)) / ($240,000 x 1.2) = 5.2 contracts, or rounded to 5 contracts.
It is important to note here that the investor wishes to retain a beta of 1, and does not want to get rid of all market exposure.

Explanation
According to the dividend discount model, the spot share prices represent the present value of all the future cash flows from the stock. If held till perpetuity, this becomes an annuity equal to the dividend, growing at its expected growth rate. Therefore Choice 'a' is the correct answer. Choice 'c' would represent the total market cap, and not the value per share that the question asks.

Explanation
Overcollateralization is when the notes issued by the special purpose vehicle are less in value compared to the underlying pool of assets, thereby providing a buffer to absorb losses. Excess spread implies that the notes issued carry a lower interest rate than the interest rate received on the underlying assets. Cash reserves are reserves intended to take first hits when losses happen. All of these are valid credit enhancements for structured products. Additionally, 'insurance wraps' are also used as a credit enhancement. Choice 'c' is the correct answer.
'Margin requirements' do not mean anything in this context and are not a valid credit enhancement used for credit derivatives.

Explanation
Futures contracts carry no gamma. Only options have gamma. Choice 'a' is the correct answer. Any instrument whose price varies in a linear fashion with respect to the underlying will have gamma equal to zero.

Explanation
Average rate options will be the most cost effective in this scenario as they are cheaper than vanilla options.
Writer extendible options on commodities will be even more expensive, and correlation products are irrelevant to the manufacturing company's hedging needs.