The seattle Coffee company plans to purchase coffee worth $1 million in 9 months on Sept. 21, 2015. The current coffee spot prices are $1.80 per pound. The company fears that the price of coffee could rise in 9 months. The company is considering a minimum variance (risk) hedge of its coffee needs using the coffee futures contract. The current price of Sept 2015 coffee futures is $1.82 per pound ton and the size of one coffee futures contract is 37, 500 pounds. The standard deviation of the coffee spot and futures prices are 0.50, respectively. The correlation between futures and spot prices is 0.96. a. Compute the minimum-variance hedge ratio (h* or N) and determine the optimal number of coffee futures contracts (N*) the firm should buy or sell today to hedge the value of his coffee inventory. (You must specify whether the firm will buy or sell coffee futures)