How Can Basis Risk Arise in an FI's Operations

Multiple Choice

How can basis risk arise in an FI's operations?

A) Basis risk arises because loan rates and deposit rates are inversely related in their movements over time.
B) Basis risk arises because loan rates and deposit rates are perfectly correlated in their movements over time.
C) Basis risk arises because loan rates and deposit rates are not correlated in their movements over time.
D) Basis risk arises because loan rates and deposit rates are not perfectly related in their movements over time.