Which of the Following Describes Basis Risk

question 1

Multiple Choice

Which of the following describes basis risk?

• A) A natural disaster that affects the underlying commodity
• B) The risk that the commodity is not marketable
• C) The variance in the price of the commodity and the value of the American dollar
• D) A change in the relationship between the futures price and the local spot price

---

Definitions:

Cilia

Microscopic, hair-like structures that extend from the surface of some cells and are involved in movement or sensory functions.

Trachea

The windpipe, a tube that conducts air from the larynx to the bronchi of the lungs, facilitating breathing.

Smooth Muscle

A type of involuntary muscle found within the walls of organs and structures such as blood vessels, the gastrointestinal tract, and the bladder, characterized by its lack of striations.

Goblet Cell

A column-shaped cell found in the respiratory and intestinal tracts, which secretes mucus to trap and move pathogens and dirt.