An oil trader wants to buy 5,000 barrels of Brent Crude Oil but has the opportunity to buy just 1,000 barrels of Brent Crude Oil at a price of $65 per barrel if he also buys 2,000 barrels of West Texas Intermediate (WTI) Oil at a price of $75 per barrel.

The market prices of the products are $80 (Brent) and $70 (WTI) per barrel. Should the trader accept the proposition and why?

a-Because the value of the opportunity is negative, the opportunity should not be taken.

b-Because the trader has no need to buy WTI Oil, the opportunity should not be taken.

c-Because the opportunity includes fewer barrels of Brent than the trader wants, the opportunity should not be taken.

d-Because the value of the opportunity is positive, the opportunity should be taken.

Answer rating: 100% (QA)

Answer D Because the value of the opportunity is positive the opport... View the full answer