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Basis Risk

   Also found in: Wikipedia 0.01 sec.
Basis risk
Unexpected changes in the basis between the placing and the lifting of a hedge. Basis risk is in excess of convergence.

Basis Risk
The risk that a change in prevailing interest rates will change the price of a company's or investor's interest-bearing liabilities disproportionate to the price of interest-bearing assets. This would increase liabilities and decrease assets, resulting in a loss.

basis risk
The possibility that a commodity contract's basis will move against the investor. For example, an investor may buy a spot contract and sell short a higher-priced futures contract on the same commodity in expectation of a narrowing of the basis but may find that the basis widens instead.


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Patients who "overbreathe" on a sustained basis risk chronic CO2 deficiencies that make them even more vulnerable to future attacks.
The result allows ceding companies to manage credit risk more efficiently while minimizing the company's basis risk.
Bowers said basis risk, which is offering rates between assets and liabilities at the same term point on the curve changed by different amounts, "can be a crucial oversight" by many financial institutions.
 
 
 
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