2. Effective Price in a Hedge 1) It is February 2021. A mining company expects to complete extracting 3000 metric tons of aluminum in August 2021. Considering the recent downtrend in the aluminum market, the company plans on using the August 2021 Aluminum futures from the CME markets to manage their risk exposure. Specifically, they want to create a hedge position to remove the uncertainty about their selling price as much as possible. The Aluminum spot price is currently at $1739.5 per metric ton and the August 2021 Aluminum futures contract that is trading at $1807.60. Each contract is for the delivery of 25 metric tons. Answer the following questions about this mining company's hedge. a) Is this a long hedge or a short hedge? How many contracts should be used to do the hedge? b) If the August 2021 Aluminum futures is $1785.10 in August 2021, what will be the effective aluminum selling price to be received by the company? (Note: Round to the nearest $0.10.)