In finance, basis is generally used to refer to the expenses or total costs of an investment. It can also be used to refer to the difference between the spot price of an asset and its corresponding derivative futures contract. Basis has important tax implications because it represents the costs associated with a product.
What is the cost basis of an investment?
Sign up for Fidelity Viewpoints weekly email for our latest insights. In a nutshell, the cost basis of an investment is the price you paid to purchase it, including any costs such as broker's fees or commissions. This can be expressed either on a per-share basis, or the total for your investment in the position.
What is a basis & how does it work?
Basis refers to the original price of an asset. It is sometimes called cost basis or tax basis. How Does the Basis Work? Let's assume you purchase 100 shares of Company XYZ stock for $5 per share and you pay a $10 commission for the purchase. Your basis would be: (100 x $5) + $10 = $510
