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:

Jurgen Habermas

A German sociologist and philosopher known for his theory on the public sphere and communicative action, emphasizing the importance of rational discourse in democratic societies.

Social System

An organized and complex set of relationships among individuals and groups, which functions based on some consensus or shared norms.

Modern Bureaucracy

A hierarchical and formal organization structure developed to manage large-scale administrative tasks efficiently, characterized by fixed areas of activity, a hierarchy of authority, and a system of rules and procedures.

Zygmunt Bauman

A Polish sociologist and philosopher who is known for his analysis of the links between modernity, globalization, the Holocaust, and consumerism.