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Due on Feb.28 by 11:00 PM Show your work briefly to all numerical questions 1....

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Due on Feb.28 by 11:00 PM Show your work briefly to all numerical questions 1. An airline expects to buy 3.5 million gallons of jet fuel in one month and decides to hedge the price risk. Since there are no futures contracts on jet fuel and heating oil prices are highly correlated with jet fuel prices, it decides to trade in heating oil futures. Each heating oil futures contract is for delivery of 42,000 gallons. If the slope of the regression of monthly changes in jet fuel prices (y-variable) and monthly changes in heating oil futures prices (x-variable) is 0.82, how many heating oil futures contracts should be bought? A. 42 contracts B. 54 contracts C. 68 contracts D. 79 contracts E. 87 contracts 2. An investor buys three July futures contracts on orange juice. Each contract is for delivery of 15,000 pounds. The current futures price is 160 cents per pound, the initial

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