Which One of the Following Statements Regarding "Basis" Is Not

question 78

Multiple Choice

Which one of the following statements regarding "basis" is not 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)None of the above.

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Definitions:

Secured Creditors

Creditors who have a legal claim or lien on a debtor's asset, providing them safety in case the debtor fails to fulfill their obligations.

Bankrupt

Describes a legal status of a person or entity that cannot repay the debts it owes to creditors, leading to legal proceedings for debt relief.

Liabilities

Financial obligations or debts that a person or entity legally owes to others.

Stigma

A negative perception or association with a property or individual, often due to psychological factors or past events, which can affect value or reputation.