An investor has just taken a short position in a 12-month crude oil forward contract. The oil price today is 62 per barrel, and the risk-free rate of interest is 6.5% per annum with continuous compounding. Storage costs of 2 are paid at the end of 3, 6, and 9 months, respectively. i. What is the price and the initial value of the forward contract? ii. If the futures price in the market is 68 what arbitrage opportunities does this create? Show all the calculations. d) Explain why a long hedgers position worsens when the basis weakens unexpectedly and strengthens when the basis strengthens unexpectedly.