People say we are in a recession, but you dont believe them. You think the recession is almost over and that the price of gold will drop soon. You decide to short 2 gold futures contracts at a price of $1759.80 per ounce, expiring in 3 months. Assume an interest rate of r = 0.03 (3%). (Hint: 1 gold futures contract covers 100 ounces of gold). (1.50 Points)

(a) If the price of gold drops to $1750.42 per ounce, what is your total profit?

(b) If the price of gold rises to $1800.42 per ounce, what is your total profit?

(c) Create a payoff and profit diagram for this position. Be sure to label all axis.