Highest exposure question

[kik92]

There's a question on the highest exposure for four option positions:
1) Long gold (counterparty: gold producer)
2) Short oil (counterparty: airline)
3) Long banks / financials (counterparty: SIFI)
4) Short soybeans (counterparty: soybeans farmer)
Which one is correct?

@David Harper CFA FRM what is your opinion on the answer to this question please?

 

[David Harper CFA FRM]

@kik92 it's fun but it's in my option isn't not quite exam grade because the "highest exposure" is ambiguous. It seems to want us to find the example where the wrong-way risk is greatest. That looks like short soybeans because soybean farmer may be more likely to default when our exposure is greatest (i.e., when the price of soybeans drops, so our short is profitable and therefore we have higher credit exposure). In contrast, the long gold is right way risk: we profit when gold price goes up and our credit exposure is high, but the gold producer will be less likely to default when gold prices are high. It's a fun/good question with respect to right-way/wrong-way risk, it's weakness is that it doesn't use exact terms. Thanks,