must present and explain in words all the steps.

Question 2 (10 points) Suppose that you are betting on an agricultural market. You wish to take on a position with five futures quinoa contracts at the price $7.30/bu. The margin requirement is 15%. Does it make sense to take on a short position in the quinoa market? Make your argument clear. How much money would you be required to deposit into your margin account if you decide to do the transaction?

Question 3 (20 points) A trader owns 55,000 units of a particular asset and decides to hedge the value of her position with futures contracts on another related asset. Each futures contract is on 5,000 units. The spot price of the asset that is owned is $28 and the standard deviation of the change in this price over the life of the hedge is estimated to be $0.43. The futures price of the related asset is $27 and the standard deviation of the change in this over the life of the hedge is $0.40. The coefficient of correlation between the spot price change and futures price change is 0.95. What is the optimal number of futures contracts with no tailing of the hedge? Show all the steps and explain which position the trader should take in the contract.