Which of the following situations describe a hedger with exposure to basis risk?

A portfolio manager for a large$-$cap growth fund knows he will be receiving a significant cash investment from a client within the next month and wants to pre$-$invest the cash using stock index futures.

II$.$ A farmer has a large crop of corn he is looking to sell before June $30.$ The farmer uses a June futures contract to lock in his sales price.

A$.$ I only

B$.$ II only

C$.$ Both I and II

D$.$ Neither I nor II

The standard deviation of price changes in a wheat futures contract is $0\mathrm{.}6,$ while the standard deviation of changes in the price of wheat is $0\mathrm{.}75.$ The covariance between the spot price changes and the futures price changes is $0\mathrm{.}3825.$ Which of the following amounts is closest to the optimal hedge ratio?

A$.0\mathrm{.}478$

B$.0\mathrm{.}850$

C$.1\mathrm{.}063$

$HR=0\mathrm{.}9S\frac{0\mathrm{.}03}{0\mathrm{.}06}=$

D$.1\mathrm{.}250$