The Basis Is the

question 49

Multiple Choice

The basis is the

• A)difference between the price of a security and the price of a futures contract on the security.
• B)gain or loss from hedging with futures contracts.
• C)difference between a futures contract price and the initial deposit required.
• D)price paid for a futures contract after accounting for transactions costs.
• E)price paid for an option contract.

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Definitions:

Direct Materials Costs

The expense incurred for raw materials that are directly traceable and allocable to a finished product.

Predetermined Rate

A rate calculated before a period begins, used to allocate costs or apply charges in various accounting practices.

Direct Labor Cost

The expense of paying workers who physically produce the goods.

Direct Materials

The raw materials that are directly used in the manufacturing process of a product.