Which One of the Following Statements Regarding "Basis" Is Not

question 84

Multiple Choice

Which one of the following statements regarding "basis" is not true?

• A) The basis is the difference between the futures price and the spot price.
• B) The basis risk is borne by the hedger.
• C) A short hedger suffers losses when the basis decreases.
• D) The basis increases when the futures price increases by more than the spot price.

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Definitions:

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Federal Government

The national government of a federal state, which shares sovereignty with its subdivisions and has powers distinct from them.

Poverty Rate

The percentage of the population living below the national poverty line, which measures the minimum level of income considered necessary to achieve an adequate standard of living.

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Increases and decreases in the level of business activity that occur at irregular intervals and last for varying lengths of time.