Question

If a share has its spot price decreases less than its futures price, then the basis will increase or decrease? . Consequently, a short hedger in the share will get (benefited or hurt or no impact?) , and a long hedger will get (increase/hurt/benefit/no impact).

Answer 1

Answer-

Given the Spot price decreases less than the futures price

Basis = The basis is the amount by which the spot price exceeds the future price

Basis = Spot Price of asset to be hedged - Futures Price of contract used = S - F

Therefore the basis will increase as the futures price is less than the spot price or the spot price is more  than the futures price.

The short hedger
A short hedge is long the spot and short the futures contract, therefore short hedge is +S - F

Short hedger = Long the basis = +B = +(S - F)
Short hedger will benefit

Long hedger
Long hedger = short the basis = -B = -(S - F)

The long hedge is short the spot and long the futures,  which is -B = -(S - F)
Long hedger will decrease or hurt.