Which of the following hedged positions would be subject to basis risk?

I. A drilling company expects to have two million barrels of crude oil available for sale in September. It is currently March, so the company takes a short 6-month crude oil futures position on two million barrels.

II. A sunflower oil wholesaler expects that the price of sunflower oil to fall in six months. The wholesaler therefore establishes a short position in a 6-month soybean oil futures contract.

	A.	Neither I nor II.
	B.	I only.
	C.	Both I and II.
	D.	II only.

A trader enters into a short forward contract on 2,000 ton iron ore. The forward price is $116.9 per ton. How much does the trader gain or lose if the price of iron ore at the end of the contract is 112. 5 per ton?

	A.	8,800
	B.	-8,800
	C.	233,880
	D.	225,000

A four-month call option on MAR stock with a strike price of $95 costs $9.2; a four-month put option on the stock with a strike price of $95 costs $10.5. Suppose that a trader buys one call option and one put option. What is the gain if the stock price is $102 at expiration?

	A.	-$8.3
	B.	-$12.7
	C.	$8.3
	D.	$12.7