"Basis" Risk May Arise in a Hedging Situation If

question 11

Multiple Choice

"Basis" risk may arise in a hedging situation if

• A)The expiry date of the futures contract and the date on which the hedge is unwound do not coincide.
• B)The futures contract used for hedging relates to a commodity that is somewhat different than that being hedged.
• C)A disconnect between spot and futures markets causes the failure of the convergence of futures to spot at expiry of the futures contract.
• D)All of the above.

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Definitions:

Tapestry Segment

Classification of neighborhoods based on demographic and socioeconomic characteristics to understand consumer behavior and lifestyle patterns.

Geodemographic Segmentation

The process of classifying populations based on geographical and demographic factors for marketing and research purposes.

Loyalty Segmentation

The process of dividing a customer base into groups based on their loyalty to the brand or company, often used to tailor marketing efforts and rewards.

Benefit Segmentation

A marketing strategy where the market is divided into segments based on the different benefits consumers seek from the product.