Problem 1 (10 points) Suppose you want to hedge the purchase of 11000 metric tons of soybeans on May 10, 2021. Futures contracts for soybeans (Ticker: ZS) are traded on the CME. (a) (1 point) What is your trading strategy? Now assume you entered the contract chosen above at a price of 528. (b) (2 points) What is the gain/loss from hedging, if you close out the contract at a price of 522? (e) (4 points) Assuming the basis will be between 20 and +20 when you close out your contract. what is your minimum total cost of purchasing the soybeans (including hedging profits/losses)? Graph the total cost C as a function of the value of the basis buaya (d) (3 points) Was the hedge successful, if the basis at the time of the sale is +3? Explain. Problem 1 (10 points) Suppose you want to hedge the purchase of 11000 metric tons of soybeans on May 10, 2021. Futures contracts for soybeans (Ticker: ZS) are traded on the CME. (a) (1 point) What is your trading strategy? Now assume you entered the contract chosen above at a price of 528. (b) (2 points) What is the gain/loss from hedging, if you close out the contract at a price of 522? (e) (4 points) Assuming the basis will be between 20 and +20 when you close out your contract. what is your minimum total cost of purchasing the soybeans (including hedging profits/losses)? Graph the total cost C as a function of the value of the basis buaya (d) (3 points) Was the hedge successful, if the basis at the time of the sale is +3? Explain