Hedging with Futures Generally Involves Basis Risk

question 44

True/False

Hedging with futures generally involves basis risk.

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Definitions:

Behaviourism

A theory of learning which states that all behaviors are acquired through conditioning, emphasizing the importance of environmental factors.

Early 1700s

A historical period marked by significant developments in various fields such as science, politics, and the arts, roughly between 1700 and 1750.

Late 1800s

Refers to the final decades of the 19th century, a period marked by significant industrial, cultural, and social changes worldwide.

Behavioural Adaptation

Adjustments in behavior in response to environmental or situational changes, aiming at improving an individual’s ability to survive or succeed.