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This hedging problem is based on the data contained in the spreadsheet stockhxls- The file contains price data from August 1, EDDB until December 1E, EDDB. Each rowr in the le stockhxls corresponds to a date. The columns in the le are the date (column 1}, the price of 8 stocks [columns 2 through 9) and the price of the Chicago Mercantile Exchange 8&P futures contract {columns 1D}. The 8 stocks, in order, are: Elrilish Petroleum {EIP}, Hewlett Packard {HPQ}, Ely Lilly (LLY), Disney {DIS}, Nucor (NUE), |lilitigroup {C}, |Google ((30013) and Walmart {WMTl The stock and futures price columns are the closing stock pn'ces adjusted for splits and dividends- \fOn August 1, 20118, the investors portfolio consisted of 4DD,D[} shares of BF, EDD,DD shares of LLY and GOOG and 1D,[it] shares of the other ve stocks. The investofs stock portfolio was worth $145,?2fm on August 1, ZDDB- The investor reinvested all dividends in the same stock that paid the dividend. By October 31, 20138, the portfolio had suffered losses and was now worth $1 15,41 1 ,[itl- At this time, the investor became worried about the outlook for the market over the next month and a half [until December 16, 2008} However, the investor suspects that the portfolio of eight stocks will outperfonn the market over that period. Thus, the investor wants to hedge awayr the overall market risk, while maintaining the same stock position- Imagine that it is October 31, 2003, and you are to advise the investor about hedging the stock portfolio using SEEP futures traded on the CME {Although no specic futures expiry,r date is given, please take this as the appropriate Jtu res contract to use)- Of course, your analysis must ignore the future unknown data until December 16, 20118. Throughout this question, assume fractions of future contracts mayr be bought or sold- a} Develop a spreadsheet or MAAB program to compute the regression hedge ratio corresponding to the objective function {4}. Explain your work- lg_pg_rjic_u_lg_r,_e_)gpl_a_i_n how you calculate the value and return of 1volur stock portfolio. How manyr futures contracts do you recommend that the investor but;r or sell? (Hint: To compute the number of futures contracts vou will need to nd out the contract size of the futures contract} b} Plot frenguencvr histograms of the returns of the unhedged and regression hedged portfolios for the period August 1, EDDB through October 31, EDDB. Prepare a summaryr of your ndings and vour recommendations to the investor as of October 31, EDDB- c) Suppose that the investor implements the regression hedge ratio from November 3, EDGE to December 16, EDGE. Plot the values of the unhedged and hedged portfolios over that timepeggd. Summarize the results of the hedge performance as of December 16, 2DDS