The Risk that Arises Because the Value of a Futures Contract will not be Perfectly Correlated with the Firm’s Exposure is Called ________.

The risk that arises because the value of a futures contract will not be perfectly correlated with the firm’s exposure is called ________.

A) commodity price risk
B) basis risk
C) liquidity risk
D) speculation risk

Correct answer is option B. Basis Risk. Explanation: The Risk that Arises Because the Value of a Futures Contract will not be Perfectly Correlated with the Firm’s Exposure is Called basis risk.