Lew Purchased Four December Futures Contracts on Cotton at the Closing

question 213

Multiple Choice

Lew purchased four December futures contracts on cotton at the closing price yesterday and sold them today at the high. What is Lew's profit or loss on this investment?

• A) -$100
• B) $560
• C) $1,120
• D) $2,240
• E) $4,580

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Definitions:

DSO

Days Sales Outstanding, a measure of the average number of days that a company takes to collect revenue after a sale has been made.

Average Inventory

It is the mean value of inventory within a specific period, calculated to help understand inventory levels and manage them effectively.

Cash Budget

A cash budget is a financial plan that estimates cash inflows and outflows over a specified period, often used by businesses to manage liquidity.

Payments Lag

Payments lag refers to the delay between the time when an expense is incurred and the time when the payment is actually made.