The Basis Is Defined as Spot Price Minus Futures Price

question 1

Multiple Choice

The basis is defined as spot price minus futures price. For a short hedger, basis strengthens unexpectedly. Which of the following is true? choose one)

• A) The hedger's position improves.
• B) The hedger's position worsens.
• C) The hedger's position sometimes worsens and sometimes improves.
• D) The hedger's position stays the same.

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Definitions:

Study Strategies

Techniques and methods applied to enhance learning and retention of material for academic success.

Identified Regulation

A type of motivation that occurs when an activity is valued and deemed important, thus accepted as personally significant.

Intrinsic Motivation

Involves being driven to engage in an activity for its own sake and the personal satisfaction it brings, rather than for some external reward.

Introjected Regulation

A form of internal motivation where individuals engage in a behavior not out of personal interest but because of internal pressures or obligations.