Which One of the Following Statements Regarding "Basis" Is True

question 17

Multiple Choice

Which one of the following statements regarding "basis" is 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.
• E)A,B,and D

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Definitions:

Effect Size

A quantitative measure of the magnitude of a phenomenon, used in statistics to assess the strength of a relationship or impact of an intervention.

Direct Costs

Direct costs are expenses that can be directly traced to producing a specific good or service, such as raw materials and labor.

Needs Analysis

The process of identifying and evaluating the needs of a particular group or organization to achieve its objectives.

Cost-effectiveness Evaluation

An assessment technique used to determine the best method of achieving a specific outcome with the least amount of resources, commonly applied in health economics and public policy.