The Reason(s)for the Basis Is/are

question 10

Multiple Choice

The reason(s) for the basis is/are:

• A) in the spot market, the buyer pays immediately, whereas in the futures market, this payment occurs at the expiry of the contract
• B) in the spot market, the ownership of the asset is transferred immediately to the purchaser, which is not the case with the purchase of futures contracts
• C) the buyer of an underlying asset faces carrying costs immediately, as opposed to the holder of a futures contract of such an asset
• D) all of these choices

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Definitions:

Intuitively

Refers to understanding or knowing something without conscious reasoning, based on gut feeling or instinct.

Decision Making Process

A methodical approach involving identification of a problem, gathering information, and selecting among alternative solutions or actions.

Convergent Thinking

A problem-solving approach involving bringing multiple pieces of information together to find a single, correct solution.

Risk Factors

Elements or conditions that increase the likelihood of a negative outcome or event.