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?

ALong hedge

BShort hedge

CCross hedge

DStack hedge

Show Suggested Answer

Suggested Answer: C

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

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Delmy

4 days ago

D) Stack hedge? More like 'whack' hedge, am I right? C is the way to go.

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Georgene

7 days ago

I'm not sure, but I think D) Stack hedge could also involve basis risk.

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Kris

14 days ago

I agree, C is the correct answer. Cross-hedging introduces that extra layer of uncertainty.

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Cory

16 days ago

C) Cross hedge, definitely. The basis risk is the key factor here.

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German

19 days ago

I agree with Mitzie, cross hedge involves an additional source of basis risk.

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Mitzie

22 days ago

I think the answer is C) Cross hedge.

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