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(i) Basis risk
I am with experts - option1 is my choice of answer as well.
Agree with the experts because of the explanations.
Answer option (i) >>>>>>>>>. Basis risk
'Basis Risk'
The risk that offsetting investments in a hedging strategy will not experience price changes in entirely opposite directions from each other. This imperfect correlation between the two investments creates the potential for excess gains or losses in a hedging strategy, thus adding risk to the position
The correct answer i
My answer will be for I..........................
I am not aware of it.. Thus, will go with expert answers: Basis Risk :-)
To the best of my knowledge it should be (i) Basis risk
It is basis risk. but you can also expand the question to other risk.
all answers here is enough too much thanx
OPTION I