An increase in the basis will __________ a long hedger and __________ a short hedger.

Name: An increase in the basis will __________ a long hedger and __________ a short hedger.
Brand: Quizplus
Rating: 4.9 (47 reviews)

Question

Quizplus · Accepted Answer

An increase in the basis benefits a long hedger because it means the spot price has increased relative to the futures price, improving their position. Conversely, it hurts a short hedger because they are adversely affected by the increase in the spot price relative to the futures price.

An Increase in the Basis Will __________ a Long Hedger