You work for a sheet metal producer. The firm plans on purchasing 100,000 lb of tin next month, and you have been requested to hedge the planned transaction using futures contracts. Will you do a long hedge or a short hedge? There are no tin futures. However, you have regressed changes in the spot prices of tin on changes in silver futures prices and in copper futures prices. Define DT, DS, and DC as the change in prices of tin, silver futures ($/oz) and copper futures ($/lb). Here are your regression results: DT = 0.001 + 0.25DS R2 =0.56 DT = -0.008 + 1.92DC R2 =0.72 a. Which futures contract appears to be more suitable for your hedging purposes? Why? What other possible information might induce you to switch to the other contract? b. How many futures contracts of the preferable commodity should be used to hedge the planned purchase of 100,000 lb of tin? Note that you must find out how many pounds of copper or ounces of silver underlie each futures contract.