A Futures Contract on a 30-Day Eurodollar Time Deposit Is

question 90

Multiple Choice

A futures contract on a 30-day Eurodollar time deposit is currently selling at an IMM index of 95.75 percent.The IMM index on a 30-day Eurodollar time deposit for immediate delivery is 95.10 percent.What is the basis?

• A)65 basis points
• B)-65 basis points
• C)650 basis points
• D)850 basis points
• E)There is no basis risk on this contract

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Definitions:

Total Variable Costs

The sum of all costs that vary with output level, including costs for raw materials, labor, and other expenses that increase with production.

Output Increases

A situation in which the quantity of goods or services produced in an economy rises.

Production Technique

The method or process used by businesses to produce goods or services, which can vary in efficiency, cost, and quality.

Price of Labor

The wage rate or the amount of compensation workers receive in exchange for their labor.