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Investment: An A-Z Guide by Philip Ryland

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B

Backwardation

In a FUTURES market the price of a contract for future delivery of, say, a commodity usually trades above the SPOT PRICE because the notional interest received from holding cash rather than the underlying commodity is added to the cost of the contract. Sometimes, however, demand for the commodity pushes the spot price above the futures price. This is a backwardation, also known as an inverted market.

Balance sheet

The financial statement of what a company owns and what it owes at a particular date, known as the statement of financial position in the United States. Traditionally, the left-hand side of the balance sheet is a schedule of the company’s assets (land, buildings, plant and equipment, cash and inventories); ...

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