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The basis is defined as spot minus futures prices. Evaluate which of the following is most likely to contribute to an increase in basis risk.

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The basis is defined as spot minus futures prices. Evaluate which of the following is most likely to contribute to an increase in basis risk. Increased dissimilarity between the underlying asset of the futures contract and the hedger's exposure. A reduction in the time between the date when the futures contract is closed and its delivery month. An increase in the open interests of the futures contract. A large difference between the futures price when the hedge is put in place and when it is closed out

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