n NISM Certifications
V-A NISM Series V-A
Medium

_______ risk arises because of difference in price movement of the derivative vis-à-vis that of the security being hedged.

Practice question from Nism VA Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Model Risk

  2. Basis Risk

    Correct answer

  3. C

    Market Liquidity Risk

  4. D

    Credit Risk

Why this is the answer

Basis Risk arises when there is a difference in the price movement between the derivative and the security being hedged.

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