Which One of the Following Statements Regarding "Basis" Is True

question 42

Multiple Choice

Which one of the following statements regarding "basis" is 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.
• E) The basis is the difference between the futures price and the spot price, basis risk is borne by the hedger, and basis increases when the futures price increases by more than the spot price.