The spot price on cocoa is $3,100 a ton. The futures price is $3,180 a ton. The basis is ________ and the market is a(n)________ market.
A)−80; carrying-charge
B)−80; inverted
C)−60; inverted
D)80; carrying-charge
E)80; inverted

Question

Quizplus · Accepted Answer

The basis is calculated as the spot price minus the futures price, which is $3,100 - $3,180 = -$80. A negative basis indicates a carrying-charge market, where futures prices are higher than spot prices due to storage costs and interest rates.

The Spot Price on Cocoa Is $3,100 a Ton