ABSTRACT
In the first part of his article, ‘Simultaneous Determination of Spot and Futures Prices’ (American Economic Review, 1961, vol. 51, pp. 1012–25), Stein is concerned with explaining the allocation of an individual's stockholding between hedged and unhedged stocks. This is done by postulating that the individual has an indifference map between the variables expected return and risk, and, by deriving an opportunity locus, giving expected return as a function of risk in relation to hedged and unhedged stock. Individual equilibrium is then determined as a tangency solution.
