Basket (finance)
From Wikipedia, the free encyclopedia
In finance, a basket is a weighted group (a linear combination) of several financial instruments.[1] The purpose could be, for example, simultaneous buying or selling, for example, during program trading.
Baskets can be traded by buying the shares separately or through a professionally negotiated transaction through a broker. People trade in baskets to arbitrage with the futures traded on the index. Baskets are also used to denote a collection of currencies, such as the ECU in the past.
Certain specific specialized "baskets":
- A stock market index is a basket for all the securities in a particular exchange.
- A market basket is a basket for all the securities on a particular market.
- A combination of individual assets, used as an underlying of a basket option.
