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    Question

    The difference between the spot price and the future

    price of a future is called as _____?
    A Margin Correct Answer Incorrect Answer
    B Hedge difference. Correct Answer Incorrect Answer
    C Spread Correct Answer Incorrect Answer
    D Basis Correct Answer Incorrect Answer

    Solution

    The difference between the spot price and the futures price of a futures contract is known as the "basis." This represents the cost of carry and reflects various factors, including interest rates, dividends, and storage costs. Traders often analyze the basis to make informed trading decisions in the futures market.

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