Section B (2 Mark)Select the CORRECT statement regarding basis risk associated with futures.

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Product: CWM_LEVEL_2
Update on: Jul 30, 2025
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AAFM CWM_LEVEL_2 Question Answer

Section B (2 Mark)

Select the CORRECT statement regarding basis risk associated with futures.

Basis risk can be completely eliminated.

Although the basis fluctuates over time, it can be precisely predicted.

The basis must be zero on the maturity date of the contract.

A hedge will reduce risk as long as basis fluctuations are positive.

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