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In finance, a basket is a weighted group (a linear combination) of several financial instruments. The purpose could be for example simultaneous buying or selling, for example during program trading.
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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.
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