A bank that hedges with financial futures cannot completely eliminate interest rate risk. Explain what basis risk

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A bank that hedges with financial futures cannot completely eliminate interest rate risk. Explain what basis risk is and why it exists. Is it ever possible to eliminate basis risk?

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Bank Management

ISBN: 978-1133494683

8th edition

Authors: Timothy W. Koch, S. Scott MacDonald

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Question Posted: Nov 03, 2015 05:57 AM

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A bank that hedges with financial futures cannot completely eliminate interest rate risk. Explain what basis risk

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Basis risk is the risk that the difference between th...View the full answer

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