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Question 1: You are the Chief Financial Officer (CFO) of Delta, an American airline company....

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Question 1: You are the Chief Financial Officer (CFO) of Delta, an American airline company. In order to hedge the risk associated to fluctuations in oil prices, you should short oil futures. (8%) Question 2: Consider the following statement: "Today the price (premium) of an American call option with maturity 5 years on IBM is $0.81. The price of a European call option on IBM with the same maturity is $0.9. Therefore, there is an arbitrage opportunity". (8 %)

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