1. Assume a hedger who is long in a gold futures contract has to close out her position prior to futures maturity. The increase in basis benefits the profitability of her position.

Is the above statement True or False? Give explanations.

2. Shares are referred to as cash equivalents as they can be easily sold at the capital market if investors need cash.

Is the above statement true or false? Give explanations.

3.

A portfolio X composed of 6 stocks must always have a lower standard deviation than portfolio Y composed of 3 stocks because it is more diversified due to a higher number of stocks in it.

Is the above statement True or False? Give explanations.