Select the CORRECT Statement Regarding Basis Risk Associated with Futures

question 65

Multiple Choice

Select the CORRECT statement regarding basis risk associated with futures.

• A)Basis risk can be completely eliminated.
• B)Although the basis fluctuates over time,it can be precisely predicted.
• C)The basis must be zero on the maturity date of the contract.
• D)A hedge will reduce risk as long as basis fluctuations are positive.

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Definitions:

Systolic Blood Pressure

The pressure in the arteries when the heart beats and fills them with blood, typically the higher of the two numbers recorded when measuring blood pressure.

Resting Heart Rate

The number of heartbeats per minute while at rest, indicating the heart's efficiency.

Orthostatic Hypotension

A form of low blood pressure that occurs upon standing up from a sitting or lying position, often causing dizziness or fainting.

Activity Intolerance

A state where an individual has insufficient physiological or psychological energy to endure or complete required or desired daily activities.