Which One of the Following Statements Regarding "Basis" Is Not

question 28

Multiple Choice

Which one of the following statements regarding "basis" is not true?

• A) the basis is the difference between the futures price and the spot price.
• B) the basis risk is borne by the hedger.
• C) a short hedger suffers losses when the basis decreases.
• D) the basis increases when the futures price increases by more than the spot price.
• E) none of these.

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Definitions:

Muscle Tissue

Muscle tissue is a specialized tissue in animals designed to contract and produce force and movement.

Epithelial Tissues

Layers of cells that cover internal and external surfaces of the body, including skin, glands, and lining of organs, serving as protective barriers and involved in absorption and secretion.

Basement Membrane

The thin, non-cell layer of an epithelial membrane that attaches to the underlying tissues; consists of tiny fibers and polysaccharides produced by the epithelial cells.

Hypothalamus

A region of the brain responsible for hormonal secretion that influences growth, metabolism, temperature regulation, and many other vital bodily functions.