"Basis" Risk May Arise in a Hedging Situation If

question 8

Multiple Choice

"Basis" risk may arise in a hedging situation if

• A) The expiry date of the futures contract and the date on which the hedge is unwound do not coincide.
• B) The futures contract used for hedging relates to a commodity that is somewhat different than that being hedged.
• C) A disconnect between spot and futures markets causes the failure of the convergence of futures to spot at expiry of the futures contract.
• D) All of the above.

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Definitions:

Pressure Ulcers

Injuries to skin and underlying tissue resulting from prolonged pressure on the skin, commonly affecting individuals who are bedridden or immobile.

Semi-Fowler's Position

A reclining position with the head and upper part of the body elevated to about 30-45 degrees, often used to promote comfort and health.

Foam Wedges

Supportive devices made of foam used to elevate, position, or support different parts of the body for comfort, therapy, or medical procedures.

Air-fluidized Bed

A therapeutic bed that uses warm air under pressure to mimic the properties of fluid, reducing pressure on the skin and improving circulation for bedridden patients.