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

question 12

True/False

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 S_t - F_t,T.

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Definitions:

IRR

Internal rate of return. A capital budgeting technique that rates projects according to their expected return on invested funds. The higher the return the better.

MIRR

Modified Internal Rate of Return (MIRR) is a financial metric that evaluates the profitability of investments, adjusting the internal rate of return (IRR) to account for the reinvestment of cash flows at a different rate.

Present Value

The current value of a future amount of money or stream of cash flows, discounted at a certain interest rate.

Future Value

The amount a present sum will grow into at a specified interest rate over a specified period of time.