Practice 1: An airline is going to purchase 2 million gallons of jet fuel in one month. There is no jet fuel futures contract, but there is a home heating oil contract. Presumably, the two assets are fairly highly correlated.

1) Airline purchases 2 million gallons jet fuel in one month and hedges with heating oil futures.

2) From historical data F =0.0313, s = 0.0263, and = 0.928, please find the optimal number of contracts for hedging strategy