1. SIA has to buy jet fuel in 6 months' time. The CFO of the company is looking to hedge the purchase. Given recent news of US WTI Oil futures contract falling due to the outbreak of the virus, he is thinking of using this particular contract to hedge. A further investigation into the correlations between jet fuel and WTI Futures and other futures contracts revealed the following: Location of Futures/Delivery Correlations and Settlement Asian Heating Oil Futures Singapore 0.6 US WTI Oil Futures Chicago 0.43 International Brent Crude Norway 0.55 Futures a) b) Is WTI Futures the right instrument to use given the location and correlation data above in the context of this Singapore company? Briefly explain why and why not. (15 marks) Is this a long or short hedge? Explain briefly. (10 marks) Explain basis risk. How would this trader utilise basis in his work? (25 marks) c)