Determine which of the following risk management techniques can hedge the financial risk of an oil producer

Question:

Determine which of the following risk management techniques can hedge the financial risk of an oil producer arising from the price of the oil that it sells.

I. Short forward position on the price of oil

II. Long put option on the price of oil

III. Long call option on the price of oil

(A) I only

(B) II only

(C) III only

(D) I, II, and III

(E) The correct answer is not given by (A), (B), (C), or (D)

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