Canvas page: Unit 5\Homework 5 Please answer the following end-of-the-chapter problems from your textbook. Chapter 14: Futures contracts 1) LEGO toys manufacturers about 19 billion Lego elements each year. Needless to say, it a huge purchaser of plastic feedstock that is produced from oil and liquified natural gas. Given the recent in oil markets, they wish to protect themselves from oil price volatility. Should the company be a short hedger or a long hedger in oil futures? 2) Pacific Ethanol is the leading producer and marketer of low-carbon renewable fuels and high-quality alcohol products in the United States. During the current COVID-19 pandemic, demand for gasoline has plummeted, taking the demand for ethanol with it. Prices have dropped dangerously close to the cost of production. Pacific Ethanol wishes to protect itself from further price drops. Should they take a short or a long position in ethanol futures? 3) Suppose you just went long 4 gold futures contracts, established at an initial settle price of $2,056 per ounce. Each contract represents 100 troy ounces. The initial margin to establish the position is $10,000 per contract, and the maintenance margin is $8,000 per contract. Suppose, too, that over the next four trading days, gold settles at $2,010, $2,002, 2,040, and $2,075, respectively. Compute the balances on your futures position and on your margin account at the end of the day you enter the position and on each of the subsequent four trading days. Clearly identify the days you would have received a margin call and the amount of each margin call. In addition, compute your total profit or loss at the end of the trading period. Assume that a margin call requires you to restore your margin account to its initial requirement. Canvas page: Unit 5\Homework 5 Please answer the following end-of-the-chapter problems from your textbook. Chapter 14: Futures contracts 1) LEGO toys manufacturers about 19 billion Lego elements each year. Needless to say, it a huge purchaser of plastic feedstock that is produced from oil and liquified natural gas. Given the recent in oil markets, they wish to protect themselves from oil price volatility. Should the company be a short hedger or a long hedger in oil futures? 2) Pacific Ethanol is the leading producer and marketer of low-carbon renewable fuels and high-quality alcohol products in the United States. During the current COVID-19 pandemic, demand for gasoline has plummeted, taking the demand for ethanol with it. Prices have dropped dangerously close to the cost of production. Pacific Ethanol wishes to protect itself from further price drops. Should they take a short or a long position in ethanol futures? 3) Suppose you just went long 4 gold futures contracts, established at an initial settle price of $2,056 per ounce. Each contract represents 100 troy ounces. The initial margin to establish the position is $10,000 per contract, and the maintenance margin is $8,000 per contract. Suppose, too, that over the next four trading days, gold settles at $2,010, $2,002, 2,040, and $2,075, respectively. Compute the balances on your futures position and on your margin account at the end of the day you enter the position and on each of the subsequent four trading days. Clearly identify the days you would have received a margin call and the amount of each margin call. In addition, compute your total profit or loss at the end of the trading period. Assume that a margin call requires you to restore your margin account to its initial requirement