Which of the following statements is/are true?

i. A Canadian company expects to receive 150 million Japanese yen at the end of July. The company decides to hedge the exchange rate risk by trading September yen futures. Today the spot price is 1.2500 cents per yen and the September futures price is 1.2000 cents per yen. If the basis at the time of closing the futures contracts in July is -0.0500, then the dollars received is $1.725 million.

ii. If there is no basis risk, a company would be able to lock in the spot price prevailing in the market at the time of initiating the hedge with futures contracts.

a.i only

b.ii only

c.Both i and ii

d.Neither i nor ii