Over-the-counter (OTC) derivatives are least likely to be exposed to basis risk. Basis risk arises due to the differences in the maturities of the contracts that are used for hedging the exposure. OTC derivatives are customizable and can be negotiated to match the maturities, thereby reducing basis risk. This is because OTC derivatives are traded directly between two parties, without going through an exchange or other intermediaries. This allows for a greater degree of customization in terms of the contract's terms and conditions, including its maturity date. Therefore, it is possible to tailor an OTC derivative contract to more closely match the specific characteristics of the exposure that is being hedged, thereby minimizing basis risk.

Choice B is incorrect. Exchange-traded derivatives are standardized contracts and hence, they may not perfectly match the underlying asset of the hedged item in terms of quantity, quality, timing or location. This mismatch can lead to basis risk. Therefore, exchange-traded derivatives are more likely to be exposed to basis risk compared to over-the-counter derivatives.

Choice C is incorrect. While it's true that both over-the-counter and exchange-traded derivatives are exposed to basis risk, OTC derivatives are less exposed due to their customizable nature.