Liberty Fuel has an inventory of 1,092,000 gallons of heating oil. The futures contracts on heating oil are based on 42,000 gallons. If the firm wishes to fully hedge its inventory, it should take which one of the following positions in heating oil futures contracts? A. short on 26 B. long on 26 C. long on 25 D. short on 24

Which one of the following statements is true regarding futures contracts? A. Cost and convenience are the two key considerations when establishing the settlement procedures. B. Futures prices are generally set equal to the spot price on the delivery date. C. The seller of a futures contract has the option to deliver cash in an amount equal to the contract value in lieu of the underlying asset. D. Futures contracts generally grant the buyer the option to accept only a portion of the contract.