Lakshmi Is Confident That the Price of Gold Is Going

question 7

Multiple Choice

Lakshmi is confident that the price of gold is going to rise because the rate of inflation is increasing. To profit from her prediction, Lakshmi should

• A) buy gold bullion today and then sell an equivalent amount of gold futures.
• B) buy a gold futures contract today.
• C) sell short a futures contract today.
• D) sell short one futures contract and offset it by buying an equivalent long futures contract.

---

Definitions:

Joint Manufacturing Processes

Production processes in which multiple products are produced simultaneously or sequentially using the same resources or inputs.

Joint Products

Products that are produced together from the same process or production system, each yielding revenue.

Product Costs

The costs directly associated with the production of goods, including direct labor, materials, and manufacturing overhead.

Weighted Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all items available for sale during the period.