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American Bankers Association Exam CTFA Topic 9 Question 88 Discussion

Actual exam question for American Bankers Association's CTFA exam
Question #: 88
Topic #: 9
[All CTFA Questions]

Which of the following involves an additional source of basis risk due to the difference between the asset being hedged and the asset underlying the futures?

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Suggested Answer: C

by Dianne at Apr 08, 2025, 03:18 PM

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Timothy
28 days ago
B) Short hedge? Nah, that's for cowards. C is the one that really hedges your bets.
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Yasuko
1 days ago
A) Long hedge is also a good option to consider.
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Delmy
1 months ago
D) Stack hedge? More like 'whack' hedge, am I right? C is the way to go.
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Mable
16 days ago
B) Short hedge
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Louisa
21 days ago
A) Long hedge
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Georgene
1 months ago
I'm not sure, but I think D) Stack hedge could also involve basis risk.
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Kris
2 months ago
I agree, C is the correct answer. Cross-hedging introduces that extra layer of uncertainty.
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Ardella
7 days ago
Yes, it definitely adds complexity to the hedging strategy.
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Barbra
8 days ago
Cross-hedging can be tricky.
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Jerry
9 days ago
D) Stack hedge
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Rosendo
13 days ago
C) Cross hedge
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Herminia
16 days ago
B) Short hedge
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Wilbert
18 days ago
A) Long hedge
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Cory
2 months ago
C) Cross hedge, definitely. The basis risk is the key factor here.
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Arlene
D) Stack hedge is not a common term in hedging strategies.
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Louisa
3 days ago
C) Cross hedge involves hedging with a different asset than the one being hedged.
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Alisha
4 days ago
B) Short hedge involves selling a futures contract to hedge against price decreases.
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Vince
7 days ago
A) Long hedge involves buying a futures contract to hedge against price increases.
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Luisa
9 days ago
D) Stack hedge is not a valid option for this scenario.
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Horace
24 days ago
C) Cross hedge definitely involves an additional source of basis risk due to the difference between the asset being hedged and the asset underlying the futures.
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Sherell
1 months ago
B) Short hedge does not involve an additional source of basis risk due to the difference between the asset being hedged and the asset underlying the futures.
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Merilyn
1 months ago
A) Long hedge involves an additional source of basis risk due to the difference between the asset being hedged and the asset underlying the futures.
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German
2 months ago
I agree with Mitzie, cross hedge involves an additional source of basis risk.
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Mitzie
2 months ago
I think the answer is C) Cross hedge.
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