The fact that, everything else being equal, a stock index futures contract declines in value over time is
A) a benefit to the bullish speculator.
B) because the market is less risk-averse in the long run.
C) called basis convergence.
D) called reversion to the mean.

Question

Quizplus · Accepted Answer

Basis convergence refers to the phenomenon where the price of a futures contract and the spot price of the underlying asset converge as the delivery date of the futures contract approaches. This is not specifically about a decline in value over time, but rather the alignment of futures and spot prices.

The Fact That, Everything Else Being Equal, a Stock Index