1. Suppose that you work for a big corn production company use the futures contract for corn to hedge the risk of price and quantity uncertainty. As a start of your analysis, you consider only two prices $2 and $3 and assume the price and quantity are positively correlated as in this table: Price/bushel Quantity Revenue Probability $ 2 0.6 million bushels $ 1.2 million 0.5 $3 0.934 million bushels $ 2.802 million 0.5 that is, there is a 50 % chance of either price. The futures price of corn is $ 2.5. We shall demonstrate the effect of hedging by computing the variance of profit. a. (1 point) Compute the variance of profit when you short the expected quantity, b. (1 point) Compute the variance of profit when you short the minimum quantity, C. (1 point) Compute the variance of profit when you short the maximum quantity. d. (1 point each, two points total) what is the hedge position that eliminates variability in revenue? why