Question: Please help answer this question about hedging using futures, thanks! Consider a farmer who plans to sell 6,000 bushels of corns on date T. The

Please help answer this question about hedging using futures, thanks!

Consider a farmer who plans to sell 6,000 bushels of corns on date T. The date-T spot price of corn is normally distributed with mean $500 per bushel and standard deviation $50 per bushel. To hedge the price risk, the farmer considers shorting corn futures with delivery on date T. The futures price is $480 per bushel, and one contract is to deliver 5,000 bushels. In addition, the farmer can take only integer number of contracts (i.e, a fraction of contract such as 0.1 is NOT allowed).

(a) How many contracts does the farmer need to take?

(b) What is the mean of the total revenue?

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