Explanation:
Basis is defined as:
The basis moved from -2.00 to -1.80, which is an increase of $0.20. Since the basis became less negative, it strengthened by $0.20.
Correct answer: C
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Q-152.1 The May 2011 spot price (S1) of wheat is $7.00 per bushel, and the December 2011 futures price (F1) is $9.00. Going forward three months to August, assume the spot price (S2) of wheat increases to $7.30, and the December 2011 futures price (F2) increased to $9.10. What happens to the basis between May and August?
A
a) Basis strengthens by +$0.10
B
b) Basis weakens by +$0.10
C
c) Basis strengthens by +$0.20
D
d) Basis weakens by -$0.20
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