18. (6 marks) Suppose you operate a small grain elevator outside of West Lafayette Indiana, and you are interested in hedging the risk you face in the cash market. At the beginning of October 2015, you bought 10,000 bushels of corn in the cash market, paying $3 per bushel. At the same time, you went short in the futures market with 2 contracts for May 2016 corn (at a price of $3.25 per bushel). Carrying (i.e., storage) costs are $0.05 per bushel per month. Fast forward to the end of April, and suppose the cash price of corn is $3.50 per bushel, while May corn is trading at $3.70 bushel. You now want to close your position. a. (2 marks) What position do you take in the respective cash and futures market? b. (4 marks) What is your profit/loss in the cash market, the futures market, and overall from the transactions? (show your work!)