Which of the Following Statements About the Basis Risk on Futures

Multiple Choice

Which of the following statements about the basis risk on futures is correct?

A) Basis risk is often completely eliminated by hedging.
B) Although the basis fluctuates over time, it can be precisely predicted.
C) The basis is approximately zero on the maturity date of the contract.
D) A hedge will reduce risk as long as the basis does not fluctuate.