Basis risk occurs when the spot and futures prices do not move in perfect unison.

Name: Basis risk occurs when the spot and futures prices do not move in perfect unison.
Brand: Quizplus
Rating: 4.7 (42 reviews)

Question

Quizplus · Accepted Answer

Basis risk is the risk that arises from the imperfect correlation between spot and futures prices. If there is a divergence between the spot and futures prices, it can lead to losses for investors. Thus, option A is correct in stating that basis risk occurs when the spot and futures prices do not move in perfect unison.

Basis Risk Occurs When the Spot and Futures Prices Do