The Basis Is Defined as Spot Minus Futures

question 3

Multiple Choice

The basis is defined as spot minus futures.A trader is hedging the sale of an asset with a short futures position.The basis increases unexpectedly.Which of the following is true?

• A) The hedger's position improves.
• B) The hedger's position worsens.
• C) The hedger's position sometimes worsens and sometimes improves.
• D) The hedger's position stays the same.

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Definitions:

Filter Section

A part of a system designed to remove or block certain frequencies or types of data, often to clean or optimize the input or output.

Electrical Noise Interference

Disturbances in electrical signals caused by external sources that can disrupt or degrade the performance of electronic equipment.

Logic Circuits

Electrical circuits designed to perform logical operations, processing digital signals according to boolean algebra.

Allen-Bradley SLC-500

A robust line of programmable logic controllers (PLCs) by Rockwell Automation, designed for small to medium-sized control applications.