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In May, Mr. Smith planted a wheat crop, which he expects toharvest in September. He anticipates the September harvest to be10,000 bushels and would like to hedge the price he can get for hiswheat by taking a position in a September wheat futurescontract.a. Explain how Mr. Smith could lock in the price he sells hiswheat with a September wheat futures contract trading in May at f0= $4.50/bu. (contract size of 5,000 bushels).b. Show in a table Mr. Smith’s revenue at the futures’expiration date from closing the futures position and selling10,000 bushels of wheat on the spot market at possible spot pricesof $4.00/bu., $4.50/bu., and $5.00/bu. Assume no quality, quantity,or timing risk.c. Give examples of the three types of hedging risk in thecontext of problem b.d. How much cash or risk?free securities would Mr. Smith have todeposit to satisfy an initial margin requirement of 5%?