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in the futures hedge, in the textbook it says
the basis within a futures hedge is defined as “Spot rate – Futures price”
Does this mean that spot rate equals futures price ??
actually i do not quite understand why there is a ( – ) between spot rate and futures price to explain the basis……..
It is a minus sign!!! The basis is the difference between the spot rate and the futures price.
This is ridiculous. I explain all this in great detail in my free lectures. If you are not prepared to watch my lectures then you really cannot expect me to answer questions that are fully explained in the lectures.
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