please help!! regarding hedging strategies

9. Hedging strategy to protect against falling prices Price fluctuations in commodities can have significant consequences for componies, especially if the fluctuation invelves a prime raw materal for a company. Different companies will adopt ditferent strategies to manage the risk in price fluctuations, including adfusting the eiming of their commodity purchases, maintaining a safety stock of their raw materials, and bedging. Consider the case of Cranked Coffee Company, a large copper-producing company: The company's cost of producing copper is about $3.00 per pound. The current market peice for copper is $3.60 per pound. The ex-month futures price for copper is 33.75 per pound. At this selaing price, the company can mainten its earnings growth. The company expects to produce so0,000 pounds of copper in this six manths. (Notei Copper futures are traded at a standard size of 250,000 pounds.) If the company does not hedge the copper it produces, it can expect to eam a tocal revenue of at the end of six months. If Crenked Coffee places a hedge on its copper production in the futures market, it would. contracts for delivery in sx monthe at a dellvery price of 53.75 per pound to generate profits that maintain its desired eamings prowth. When the contract comes due in six months, the spot price of copper is $255 per pound in the cash markets. Frices on the new sximonth futurta contracts in copper are $3.19 per pound. Calculate the expected revenue in the folloning markets: Futures Market Niet gain or loss in the futures market: $600,000$1,595,000$225,000$1,475,000 Cash Market Net gain or loss in the cosh market: $280,000$1,595,000$150,000$225,000 The cost of production of cogper is 51,500,000. Thus, Cranked Coffee will in the futures markst and This gain and loss offset each other, and the company benefits from placing the hedge. This hodging strategy would be referred to as a and it helps protect the producer to sell a commodity against falling prices