Basis Risk Occurs Because It Is Generally Impossible to

question 31

Multiple Choice

Basis risk occurs because it is generally impossible to

• A)hedge unanticipated rate changes.
• B)exactly predict interest rate changes.
• C)exactly match the terms of the hedging instrument with the terms of the asset or liability at risk.
• D)find negatively correlated asset prices.
• E)All of the options.

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Definitions:

Age

The length of time that a person has lived or a thing has existed, often used as a measure of maturity, development, or lifespans.

Central Nervous System

Brain and spinal cord.

Newborns

Infants in the very first weeks of life, typically considered to be up to 1 month old.

Bonding

The process of forming a close personal relationship, especially between family members or friends, typically through shared experiences or affection.