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In this question they did not tell you if the basis is positive or negative(unless it does and i didn’t see or understand the statement). but the basis is 22 my question is how do you know to take it away from the Libor as in this question, but is it always like that is the basis always negative? (I dont remember if ive done a question where the basis is added to the Libor to get the future).
Thank you
The futures price and LIBOR will move closer together over time.
So if the futures price is currently higher then it will always be higher.
If it is currently lower then it will always be lower.- Topics: 43
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Perfect so it can go either way, so how do we know in the Keshi question that Future is lower then spot, all they gave us is the basis differences?
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