What Is a Static Item Versus an Action Item

question 52

Essay

What is a static item versus an action item?

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Definitions:

Basis Risk

Basis Risk is the risk that the price difference between a futures contract and the underlying asset will widen or narrow, impacting hedging strategies.

Futures Prices

Futures prices are the agreed prices at which future contracts for commodities, securities, or financial instruments will be bought or sold at a future date.

Cash Price

The actual price a buyer pays in cash at the time of purchase, as opposed to credit purchase terms.

Hedge Position

An investment made to reduce the risk of adverse price movements in an asset, usually through derivatives like options or futures contracts.