The standard deviation of monthly changes in the spot price of live cattle is (in cents per pound) 1.2. the standard deviation of monthly changes in the futures price of live cattle for the closest contract is 1.4. the correlation between the futures price changes and the spot price changes is 0.7. it is now october 15. a beef producer is committed to purchasing 200,000 pounds of live cattle on november 15. the producer wants to use the december live cattle futures contracts to hedge its risk. each contract is for the delivery of 40,000 pounds of cattle. what strategy should the beef producer follow?

answer: the price of one pound cabbage = $ 0.8

the point (10,8) represents that the cost of 10 pounds cabbage is $ 8

step-by-step explanation:

since, here is a proportional relation between the number of pounds of cabbage (x) and the price in dollars (y).

therefore, we can write,

⇒ y = k x

where k is the constant of proportionality.

now, point (5,4) is in the line.

thus, it will satisfies the above equation of line.

⇒ 4 = 5 k

⇒ k = 0.8

thus, the equation of the line is,

y = 0.8 x

a) for x = 1,

y = 0.8

therefore, the cost of one pound of cabbage is 0.8 dollars.

b) in the below graph (10,8) represents that the cost of 10 pounds of cabbage is 8 dollars.

s

step-by-step explanation:

this is a tricky question, lol,   but i think the answer is 100,000.