Boo Inc. is specialized in producing "chicken cider," a long-time popular item consumed by citizens of Moo Island due to its special culture. In January 2020, Boo Inc. starts to raise baby chickens and plans to have 15,000 jars of chicken cider for sale in August 2020. The current market price of chicken cider is $8 per jar, and therefore, Boo Inc. is looking forward to $120,000 of revenue. However, they heard a rumor about kids in Moo Island disliking this product for unknown reasons, and worry about the price of chicken cider lowering in August 2020. 3. How can Boo Inc. hedge the risk using the futures market? Explain it step by step in detail. Your answer must include what positions Boo Inc. can take now (January 2020) and in August 2020. (10 points) Suppose the market price of chicken cider decreases to $5 per jar in August 2020. What would be the gains and/or losses of Boo Inc. if they use the futures market to hedge the risk? And what would happen if they use the options market if the option premium is $5,000 for each contract? (Suppose each standardized contract covers 15,000 jars of chicken cider.) (10 points) Suppose the market price of chicken cider increases to $10 per jar August 2020. What would be the gains and/or losses of Boo Inc. if they use the futures market to hedge the risk? And what would happen if they use the options market if the option premium is $5,000 for each contract? (10 points) a. b. c