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https://www.investopedia.com/terms/b/basisrisk.asp
Jun 16, 2019 · Basis risk is the financial risk that offsetting investments in a hedging strategy will not experience price changes in entirely opposite directions from each other. This imperfect correlation ...
https://www.investopedia.com/terms/d/dvp.asp
Delivery Versus Payment - DVP: A securities industry settlement procedure in which the buyer's payment for securities is due at the time of delivery. Delivery versus payment (DVP) is a settlement ...
https://www.thebalance.com/futures-prices-versus-physical-prices-808962
When the farmer employs a hedging strategy such as the one described, he exchanges price risk for basis risk. Basis risk is the risk that the differential between the cash price and the futures price diverges from one and other. Therefore, the farmer still has risk on his crop, not outright price risk but basis risk.
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