Basis: The price an investor pays for a security plus any out-of-pocket expenses. It is used to determine capital gains or losses for tax purposes when the stock is sold. Also, for a futures contract, the difference between the cash price and the futures price observed in the market.

 

Related Words

Basis: Basis is the total cost of buying an investment or other asset, including the price, commissions, and other charges. If you sell the asset, you subtract your basis from the selling price to . . . View Full Definition

Adjusted Basis: The original cost basis of a property reduced by certain deductions and increased by certain improvement costs. The original basis determined at the time of acquisition is reduced by the amo . . . View Full Definition

Agency Basis: A means of compensating the broker of a program trade solely on the basis of commission established through bids submitted by various brokerage firms.

Accrual Basis: In the context of accounting, practice in which expenses and income are accounted for as if they are earned or incurred, whether or not they have been received or paid. Antithesis of cash ba . . . View Full Definition

Price Value Of A Basis Point (PVBP): Also called the dollar value of a basis point; a measure of the change in the price of a bond if the required yield changes by one basis point.

Fare Basis: Conditions, including service class and ticketing provisions, that determine a fare. Fare basis is designated by identifying letters and/or numbers on a ticket.

Depreciable Basis: In investment real estate only structures can be depreciated. The depreciable basis is the original basis less the value of the land.

Basis Risk: Uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for price risk.

Basis Point: Yields on bonds, notes, and other fixed-income investments fluctuate regularly, typically changing only a few hundredths of a percentage point. These small variations are measured in basis p . . . View Full Definition

Basis Price: When you sell a security, such as a stock or bond, or real estate, the price you use to calculate your capital gains is known as your basis price. In the case of a security, it includes the . . . View Full Definition