Which of the Following Is Not a Type of Risk

question 15

Multiple Choice

Which of the following is not a type of risk associated with futures contracts?

• A) basis risk
• B) liquidity risk
• C) market risk
• D) postpayment risk

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Definitions:

Independent Events

In probability theory, events that do not affect the occurrence of one another.

Insurance Premiums

Payments made to an insurance company in exchange for coverage, typically paid on a monthly or annual basis.

Demand Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity of that good or service that consumers are willing and able to purchase at various prices.

Adverse Selection

A situation in which one party in a transaction possesses information that the other party does not, leading to an imbalance in the exchange, often seen in insurance markets.