In the context of a futures contract, the basis is defined as ________.
A) the futures price minus the spot price
B) the spot price minus the futures price
C) the futures price minus the initial margin
D) the profit on the futures contract

Question

Quizplus · Accepted Answer

The basis is calculated as the futures price minus the spot price. It represents the difference between the current market price of the underlying asset (spot price) and the price agreed upon in the futures contract. A positive basis indicates that the futures price is higher than the spot price, while a negative basis means that the futures price is lower than the spot price.

In the Context of a Futures Contract, the Basis Is