The Basis on a 1-Year Futures Contract Is 52 Points

question 31

Multiple Choice

The basis on a 1-year futures contract is 52 points.If spot prices do not move and the risk-free term structure of interest rates remains flat and also does not move,then what should be the basis 1-week before expiration?

• A) 1 point
• B) 7 points
• C) 10 points
• D) 52 points

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Definitions:

Convertible Debt

A type of financing option that allows the holder to convert the outstanding debt into equity, typically shares of the issuing company, under specified conditions.

Venture Capitalist

A professional investor who provides capital to companies exhibiting high growth potential in exchange for equity or an ownership stake.

Equity

The value of an ownership interest in property, including shareholders' equity in a company, which represents the residual value to shareholders after debts and liabilities have been settled.

Angel Investors

Wealthy individuals who provide capital for start-ups or entrepreneurs, often in exchange for ownership equity.