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    Question

    The difference between the futures price and the spot

    price of an asset is known as _____
    A Premium Correct Answer Incorrect Answer
    B Discount Correct Answer Incorrect Answer
    C Basis Correct Answer Incorrect Answer
    D Margin Correct Answer Incorrect Answer
    E Arbitrage Correct Answer Incorrect Answer

    Solution

    Basis = Futures price − Spot price. It may be positive or negative depending on market conditions and is widely used in derivatives analysis.

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