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:

Overt External Guidance

Visible and outward guidance or instruction provided to help direct or control actions or behaviors.

Covert Self-guidance

An internal process where an individual directs their own actions and thoughts in achieving personal goals without external observation.

Self-evaluation Self-statement

Internal reflections and judgments that individuals make about their own performance or behavior.

Irrational Conclusions

Beliefs or judgments not based on rational analysis or evidence, often leading to negative thinking patterns.