The Risk That Arises Because the Value of the Futures

question 39

Multiple Choice

The risk that arises because the value of the futures contract will not be perfectly correlated with the firm's exposure is called:

• A)commodity price risk.
• B)basis risk.
• C)liquidity risk.
• D)speculation risk.

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Definitions:

Cartilage

A flexible, rubber-like tissue present in various parts of the body, such as joints and airways, that provides structure and support without the rigidity of bone.

Fatty Tissue

Connective tissue in the body that stores fat, serving as an energy reserve, insulating against heat loss, and providing cushioning for organs.

Bones

The rigid organs that constitute part of the vertebrate skeleton, providing structure and protection to the body.

Fine Motor Skills

Physical skills that involve the small muscles and eye–hand coordination.