The difference between the cash and futures price of the financial instrument that is used
For a hedge is known as:
A) spread risk
B) dollar gap risk
C) duration gap risk
D) basis risk
E) none of the above

Question

Quizplus · Accepted Answer

Basis risk is the risk that the cash and futures prices may not move in perfect correlation, leading to a difference between them.

The Difference Between the Cash and Futures Price of the Financial