The Basis (B_t,T)at Time T Between the Spot Price (S_t)and

question 20

Multiple Choice

The basis (B_t,T) at time t between the spot price (S_t) and a futures contract expiring at time T (F_t,T) is

• A) B_t,T = St + F_t,T
• B) B_t,T = S_t - F_t,T
• C) B_t,T = S_t × F_t,T
• D) B_t,T = S_t/F_t,T
• E) None of the above

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Definitions:

Capital Structure

Capital Structure is the mix of debt and equity financing a company uses to fund its operations and growth.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be repaid at a later date, usually with interest.

Equity

The owner's interest in an asset or business, representing the residual value after liabilities are deducted from assets.

Financial Manager

A professional responsible for the financial health of a corporation, overseeing investment activities, and planning strategies for long-term financial goals.