Question: 1. [1 point] Three months from now Joel needs to purchase a specific commodity. Unfortunately, there are no futures contracts written on that particular commodity.

1. [1 point] Three months from now Joel needs to purchase a specific commodity. Unfortunately, there are no futures contracts written on that particular commodity. However, futures contracts are available on a related commodity which mature in three months as well. The standard deviation of the spot price is $0.61 and the standard deviation of the futures price is $0.54. What hedge ratio is optimal for Joel's exposure, assuming the correlation of the spot and futures prices is 0.75

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