Basis Grade

  

Also known as contract grade or pargrade, basis grade is the minimum standard an asset must meet to be considered worthy of inclusion in a futures contract.

It's essentially the baseline against which other types of the same product are compared, in order to determine the quality of the item, economically speaking. Which, incidentally, is pretty much our first language.

Related or Semi-related Video

Finance: What Does It Mean to Delist?4 Views

00:00

finance a la shmoop what does it mean to delist? well when you list your company

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you are listing it on the big board this thing or at least having it show up in [Companys shown as a list on a screen]

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the list of publicly traded stocks on some exchange somewhere you know like

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this list think listing good...de- listing probably very bad delisting

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happens in one of two ways either an already existing public company gets

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bought by an even larger company and it no longer trades is a separate

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standalone security so its ticker symbol has taken off the exchange and la-dee-da [Company name removed from stock board]

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it's done that's good but delisting also happens when a company's stock price is

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so low that it can't trade as a standalone company anymore meaning that

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it comes to trade at a minimum threshold of an exchange like below $1 a share

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yeah breaking the buck there is a little different with equities but it's a bad

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thing why is this a problem well if buyers

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want to buy a stock there's a given amount of administration and overhead

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and legal things that have to be done that cost money so if that minimum fixed

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cost is something like four or five cents a share

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then at $1 it costs four or five percent of the investment each time those shares

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are traded right like that's at a buck a share each and it gets worse as the [Arrow points to share price]

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stock falls further below a dollar so to fight delisting companies often do

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reverse splits that is if they had two hundred million shares outstanding and

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we're gonna get delisted trading at $1 a share while they might do a one for ten

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reverse split such that after this reverse split the company has only 20

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million shares outstanding but they're trading now at about ten bucks a share

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it's not a great way to go investors usually hate things like that [People arguing over shares]

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and would likely sell down the stock on the announcement but keeping the stock

01:52

well above a buck a share keeps the delisting demons at bay [Man stood in the street and demons float around him]

01:56

at least for a while

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