You are a spot hops trader for Budweiser and you are trying to hedge your hops price risk. There is no futures contract for hops so you use a barley futures contract as your hedge instrument. Through your calculations you find standard deviation of spot hop prices is = 0.30 and the volatility of the barley futures contracts over the same period is =0.12. The correlation of the two changes in prices is = 0.66. What is the optimal hedge ratio?

• A.can not tell from the given information
• B.1.65
• C.0.41
• D.0.75