5 You own a refinery buying oil from ARAMCO Saudi Arabia and need to buy 10M barrels of oil in December 6 months away with the riskless rate of 5%. Current spot prices are $24. Contract size 1000 bbls. a. What is the DEC fair value price if storage is 2% per annum and the convenience yield is +4%? b. What is the number of contracts for a simple quantity hedge? Are you long or short futures? C. What is the number of contracts for a value hedge (untailed)? d. If the spot and futures price move up 10%, what is the change in the dollar value of the oil purchase at spot, in a simple hedge, and in a value hedge? 5 You own a refinery buying oil from ARAMCO Saudi Arabia and need to buy 10M barrels of oil in December 6 months away with the riskless rate of 5%. Current spot prices are $24. Contract size 1000 bbls. a. What is the DEC fair value price if storage is 2% per annum and the convenience yield is +4%? b. What is the number of contracts for a simple quantity hedge? Are you long or short futures? C. What is the number of contracts for a value hedge (untailed)? d. If the spot and futures price move up 10%, what is the change in the dollar value of the oil purchase at spot, in a simple hedge, and in a value hedge