A Company Is Considering Using Futures Contracts to Hedge an Identified

question 31

Multiple Choice

A company is considering using futures contracts to hedge an identified interest rate exposure on its debt facilities.However,it is concerned about the impact of basis risk.Which of the following statements regarding basis risk is incorrect?

• A) Basis is the difference between price in the physical market and the price of the relevant futures market contract.
• B) The existence of basis risk removes the opportunity for a perfect borrowing hedge.
• C) Initial basis will be evident while the market is of the view that physical market prices will remain stable.
• D) Final basis will exist where a futures contract is used to hedge a risk associated with a different physical market product.

Recognize the importance of environmental factors and community infrastructure in disease prevention.

Understand the historical development of public health initiatives and their impact on community health.

Analyze the role of government and non-governmental organizations in the advancement of public health.

Identify key figures and their contributions to public health and nursing.

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Definitions:

Fourteenth Amendment

A constitutional amendment adopted in 1868 that grants citizenship to all persons born or naturalized in the United States, including former slaves, and provides all citizens with “equal protection under the laws.”

State Restrictions

Laws or regulations imposed by state governments to limit or control certain activities or behaviors.

Establishment Clause

The Establishment Clause is part of the First Amendment to the US Constitution, prohibiting the government from making any law respecting an establishment of religion, thereby ensuring a separation of church and state.

Separation of Church and State

The separation of church and state is a principle that mandates the government must maintain an impartial stance on religious matters and prohibits the establishment of a state religion.