EXCEL Financial Hedging question: Determine the amount of a commodity to buy and its cost, to hedge for another commodity

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E E A Chemical Company has an uncertain price for 45000 tons of Acetone, but no futures or options exist for a perfect hedge. After 4 days, the company must choose between 6 other chemicals to base its hedge on. A, B, C, D, E, or F. Date Acetone 1-Jan 158.00 2-Jan 170.00 3-Jan 181.00 4-Jan 174.00 Chemical Commodities A B 202.00 176.00 142.00 203.00 173.00 143.00 205.00 163.00 144.00 199.00 168.00 134.00 D 201.00 197.00 185.00 185.00 116.00 126.00 127.00 133.00 F F 101.00 102.00 111.00 106.00 Today's date is 4-Jan Price per ton of chemical Acetone 174.00 A A 199.00 B 168.00 134.00 D 185.00 Using this data, solve the following: ! SHOW YOUR FORMULAS! E 133.00 106.00 F a.) Calculate the # of tons and dollars of chemical F for the company to use as a hedge for their Acetone # of tons = $= A B C D E F Acetone 171 202 170 141 192 126 105 b.) Statistics AVERAGE VARIANCE STD DEV Calculate the Standard Deviation of the Company's newly hedged position New STDEV = 6 33 21 68 21 93 10 50 7 3 6 5 8 5 c.) c Buy or Sell to hedge the Acetone? A B D E E F F Correlation Acetone Acetone 1.00 0.28 B B -0.95 C -0.05 D -0.89 E 0.79 F 0.90 1.00 -0.28 0.94 0.08 1.00 0.06 1.00 0.93 0.42 -0.58 1.00 -0.84 1.00 -0.33 0.35 -0.67 -0.99 0.02 -0.89 0.55 1.00 The recommended chemical to use as a hedge for Acetone is: F