Which One of the Following Statements Regarding "Basis" Is True?I)

question 44

Multiple Choice

Which one of the following statements regarding "basis" is true?I) The basis is the difference between the futures price and the spot price.II) The basis risk is borne by the hedger.III) A short hedger suffers losses when the basis decreases.IV) The basis increases when the futures price increases by more than the spot price.

• A) I only
• B) II only
• C) III only
• D) IV only
• E) I, II, and IV.

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Definitions:

Annual Meeting

A yearly gathering of a company's shareholders or members to discuss its affairs, review financial statements, and elect board members.

Special Meetings

Meetings called for a specific purpose, outside of the regular schedule of meetings, often requiring a special notice for attendance.

Per Share Value

The monetary value assigned to each individual share of stock in a company.

Minority Shareholder

An investor who owns less than 50% of a company's shares and therefore has less influence on corporate decisions compared to majority shareholders.