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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Timothy

1 months ago

B) Short hedge? Nah, that's for cowards. C is the one that really hedges your bets.

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Fausto

8 days ago

C) Cross hedge is a bit more complex but can be effective in certain situations.

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Yasuko

17 days ago

A) Long hedge is also a good option to consider.

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Delmy

2 months ago

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

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Yolando

17 hours ago

C is definitely the way to go.

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Shawna

3 days ago

C) Cross hedge

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Mable

1 months ago

B) Short hedge

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Louisa

1 months ago

A) Long hedge

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Georgene

2 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

23 days ago

Yes, it definitely adds complexity to the hedging strategy.

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Barbra

24 days ago

Cross-hedging can be tricky.

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Jerry

25 days ago

D) Stack hedge

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Rosendo

29 days ago

C) Cross hedge

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Herminia

1 months ago

B) Short hedge

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Wilbert

1 months 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

16 days ago

D) Stack hedge is not a common term in hedging strategies.

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Louisa

19 days ago

C) Cross hedge involves hedging with a different asset than the one being hedged.

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Alisha

20 days ago

B) Short hedge involves selling a futures contract to hedge against price decreases.

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Vince

23 days ago

A) Long hedge involves buying a futures contract to hedge against price increases.

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Luisa

25 days ago

D) Stack hedge is not a valid option for this scenario.

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Horace

1 months 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

2 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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