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Question 4 Discuss When and why is basis or futures mispricing risk important for hedgers? What is the effect of mispriced futures on the returns
Question 4
Discuss
- When and why is basis or futures mispricing risk important for hedgers?
- What is the effect of mispriced futures on the returns of a short-term hedge?
Discuss
If futures are over-priced (underpriced) relative to the spot, do you expect futures to be more or less over-priced (underpriced) in the next period?
- Does it depend on the length of this period (one day or one week or one month)?
- What are the implications of this for mispricing/basis risk involved in hedging?
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Use The News To Separate The Noise From The Investment Nuggets And Make Money In Any Economy
Authors: Maria Bartiromo
1st Edition
0061873489
