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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