What is basis in the futures market?

In the futures market, basis represents the difference between the cash price of the commodity and the futures price of that commodity. It is a critically important concept for portfolio managers and traders to grasp because the relationship between cash and futures prices affects the value of the contracts used in hedging.

What are the characteristics of a market?

There are some key characteristics that help define a market, including the availability of an arena, buyers and sellers, and a commodity that can be purchased and sold. A market is a place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services.

What is an example of a market?

Markets can be physical like a retail outlet, or virtual like an e-retailer. Other examples include illegal markets, auction markets, and financial markets. Markets establish the prices of goods and services that are determined by supply and demand. Features of a market include the availability of an arena, buyers and sellers, and a commodity.

What is a market & how does it work?

A market is where consumers and sellers get together to buy and sell goods and services. The term emerged in the British Isles in the early 1200s, and meant ‘a meeting at a fixed time for buying and selling livestock and provisions.’ It came from Old French ‘marchiet’, which meant ‘trade, commerce, marketplace.’