Series 3: Exercise

Exercise

Answer true or false.

1. 1. _____ Basis is calculated by subtracting the current futures price from the spot price.
2. 2. _____ A commodity with a June cash price of $4.20 and a September futures price of $4.10 would be referred to as “10 over September.”
3. 3. _____ Cash price is not affected by local conditions.
4. 4. _____ Basis is identical to a commodity’s cost of carry.
5. 5. _____ Basis for a commodity will typically become more negative during its harvest month.
6. 6. _____ Basis always converges toward zero at a given delivery point as a contract nears termination.
7. 7. _____ Basis pa