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

question 84

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.

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Definitions:

Unauthorized

Lacking official permission or approval for actions or access.

Paycheck

A check issued by an employer to pay an employee for services rendered.

Embezzlement

The act of dishonestly withholding or appropriating assets, usually money, entrusted to one's care for personal use.

Daily Cash Flow

A financial report showing the net amount of cash that is received or dispersed by a business within a given day.