Thank you for visiting Suppose you are a dealer in silver The spot silver price is 1 285 10 The price of a futures contract of silver expiring in. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
As a dealer in silver, the spot price of silver is $1,285.10, and the price of a futures contract expiring in January is $1,286.40, the original basis will be 1.30 Option B is correct answer.
The original basis can be calculated by subtracting the spot price from the futures price. In this case, the futures price is $1,286.40 and the spot price is $1,285.10. Subtracting the spot price from the futures price gives us a difference of $1.30.
Since the spot price is lower than the futures price, the original basis is positive. Therefore, the correct answer is B. 1.30.
The basis represents the difference between the spot price and the futures price. It reflects market expectations and can vary over time. A positive basis indicates that the futures price is higher than the spot price, suggesting a potential upward trend or market optimism. Conversely, a negative basis indicates that the futures price profit is lower than the spot price, signaling a potential downward trend or market pessimism. Traders and investors analyze the basis to make informed decisions regarding hedging, arbitrage opportunities, or speculating on future price movements.
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Thank you for reading the article Suppose you are a dealer in silver The spot silver price is 1 285 10 The price of a futures contract of silver expiring in. We hope the information provided is useful and helps you understand this topic better. Feel free to explore more helpful content on our website!
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