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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E Because the oil producer is to sell oil in the future heshe will benefit from incre...View the full answer
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