Basis Risk Occurs When the Underlying Security in the Futures

question 57

True/False

Basis risk occurs when the underlying security in the futures contract is not the same asset as the cash asset on the balance sheet.

---

Definitions:

Severe Cold

An intense or acute condition of the common cold, characterized by symptoms such as fever, cough, congestion, and body aches.

Exhaustion

Describes a state of extreme physical or mental fatigue, often resulting from prolonged stress or activity without adequate rest and recovery.

General Adaptation Syndrome

A three-stage physiological response to stress that consists of alarm, resistance, and exhaustion phases, as proposed by Hans Selye.

Poisonous Snake

Describes a snake capable of delivering venom through a bite, which can be harmful or lethal to humans and other animals.