a. Suppose you sell 6 orange juice contracts at the futures price of 113 cents per pound. The contract size is 15,000 pounds.

i. How much do these 6 contracts cost you? (2 marks) ii. If the futures price is higher by 4 cents per pound, how much do you make or lose? (3 marks)

b. A put option sells for $2.8. It has a strike price of $38 and four months until expiration. If the underlying stock sells for $40 per share, what is the price of a call option with a $38 strike price and four months until expiration? The risk-free interest rate is 5% per year. (3 marks)