Now is January2021. Olivia will sell10,000 bushels of corn in March2021. To hedge the corn price, she sells a March 2021maturity corn contract at the future price of $2.20per pound. Suppose that when the contract matures in March 2021, the market price of corn turns out to be $2per bushel. This future contract calls for delivery of 10,000 bushels.

a) Calculate Olivias payoff from selling10,000 bushels of corn in the spot market in March2021(note: receiving a payment is a positive payoff);

b) Calculate Olivias short payoff from the future market in March 2021

c) Calculate Olivias total payoff from both the spot and future markets in March 2021;

d) If the market price of corn goes up to $2.50 per bushel in March 2021, what's Olivias total payoff? Is it the same as the total payoff in part c)? Why?

e)Draw the future contract payoff graph for Olivia.