The Risk That Arises Because the Value of the Futures

question 39

Multiple Choice

The risk that arises because the value of the futures contract will not be perfectly correlated with the firm's exposure is called:

• A)commodity price risk.
• B)basis risk.
• C)liquidity risk.
• D)speculation risk.

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Definitions:

Binocular Disparity

The difference in image location of an object seen by the left and right eyes, resulting from the eyes’ horizontal separation and providing a basis for depth perception.

Perceptual Hypotheses

Assumptions made by the brain in order to interpret sensory information and perceive the environment.

Psychology

The scientific study of the mind and behavior, encompassing a variety of fields including cognitive, biological, and social aspects.

Empirical

Is grounded on, revolves around, or can be authenticated by experiencing or witnessing phenomena directly, rather than by theoretical inference or logical suppositions.