8. Suppose a hedger is short one unit of the stock A, with price SA = 100, and plans to close this short position in one month. She attempts to hedge the risk in this stock by buying/selling another stock B, with price SB = 200. Assume that the standard deviations of monthly changes in the two stock prices are o A = .3, and ob = 56, and the correlation between the monthly price changes is paB = -0.7. Then, (a) Find the optimal hedge ratio that she should use. (b) Find the optimal number of units of stocks she should buy or sell. (c) What is the variance of her position in one month. 8. Suppose a hedger is short one unit of the stock A, with price SA = 100, and plans to close this short position in one month. She attempts to hedge the risk in this stock by buying/selling another stock B, with price SB = 200. Assume that the standard deviations of monthly changes in the two stock prices are o A = .3, and ob = 56, and the correlation between the monthly price changes is paB = -0.7. Then, (a) Find the optimal hedge ratio that she should use. (b) Find the optimal number of units of stocks she should buy or sell. (c) What is the variance of her position in one month