A trader owns 55,000 troy oz of silver and decides to hedge with 6-month silverfutures contracts. Each futures contract is on 5,000 troy oz. The standard deviation of thechange in the spot price of silver is 0.43. The standard deviation of the change in silver futures prices is 0.50. The covariance(not correlation) between the two price changes is 0.16.(3 points)

What is the optimal hedge ratio that minimizes the variance of the hedged portfolios value?(3 points)

How to achieve the minimum variance hedge with the given futures contracts?(3 points)

What is the variance of the optimally hedged portfolio?(3 points)