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1) An oil refinery company wants to hedge the riskagainst the rise in the oil price for purchase in the December of2018. Thus, it enters into the oil futures market now. The currentfutures price of oil for delivery in January 2019 is $48/barrel. InDecember 2018, the refinery closes out its crude oil futuresposition when the market futures price of oil for delivery inJanuary 2019 is $56/barrel. The company then purchases the oil atthe market price of $57/barrel. What is the effective price thatthe refinery pays for crude oil per barrel?2) It is October. Suppose the price for the March and April (ofthe next year) natural gas futures contracts is $2.552/MMBtu and$2.308/MMBtu, respectively. If you learned that there were lessmajor tropical storms in the Gulf Coast area than normal years,what position in March and April contracts would you take?