The effect of hedging depends on the change of basis, which refers to the difference between the spot price of the same commodity in a specific place and the futures contract price at the same time. A weak basis is beneficial to the hedgers, while a strong basis is beneficial to the hedgers.

Convexity is the duration change caused by the change of 1% yield.

The base point refers to the smallest unit of measurement to measure the change of interest rate of bonds or promissory notes. 1 basis point is equal to 0.0 1%, that is, 1% 1%.

Duration is the weighted average of the time required for cash flow payment in each period of bonds.