Which of the Following Increases Basis Risk

question 4

Multiple Choice

Which of the following increases basis risk?

• A) A large difference between the futures prices when the hedge is put in place and when it is closed out
• B) Dissimilarity between the underlying asset of the futures contract and the hedger's exposure
• C) A reduction in the time between the date when the futures contract is closed and its delivery month
• D) None of the above

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The largest island in the British Isles, comprising the countries of England, Scotland, and Wales.

Amnesia

A condition involving the loss of memories, such as facts, information, and experiences, typically due to brain injury or psychological trauma.

Psychogenic

Originating from psychological causes rather than physical ones, often referring to symptoms or illnesses.

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