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Under which scenario is basis risk likely to exist

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Reference no: EM13505677

Under which scenario is basis risk likely to exist?

A. A hedge (which was initially matched to the maturity of the underlying)is lifted before expiration.
B. The correlation of the underlying and the hedge vehicle is less than one and their volatilities are unequal.
C. The underlying instrument and the hedge vehicle are dissimilar.
D. All of the above are correct.

Reference no: EM13505677

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