Question
QUESTION 9 Why does basis risk occur? Changes in the spot asset's price are not perfectly correlated with changes in the price of the asset
QUESTION 9
Why does basis risk occur?
| Changes in the spot asset's price are not perfectly correlated with changes in the price of the asset delivered under a forward or futures contract. | ||
| The daily marking-to-market process enables an FI manager to close out a futures position by taking an exactly offsetting position. | ||
| Spot and futures contracts are traded in different markets with different demand and supply functions. | ||
| Answers B and C only. | ||
| Answers A and C only |
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Rental Application Form Book
Authors: Little Deer Press
1st Edition
979-8420403747
