Exercise
Answer true or false.
1. _____ Basis is calculated by subtracting the current futures price from the spot price.
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. _____ Cash price is not affected by local conditions.
4. _____ Basis is identical to a commodity’s cost of carry.
5. _____ Basis for a commodity will typically become more negative during its harvest month.
6. _____ Basis always converges toward zero a