Cole's Jewelers Purchased a Futures Contract on 200 Ounces of Gold

question 89

Multiple Choice

Cole's Jewelers purchased a futures contract on 200 ounces of gold to be exchanged 3 months from now. As the contract holder, Cole's Jewelers:

• A)has the right, but not the obligation, to purchase 200 ounces of gold 3 months from now.
• B)has the obligation to purchase 200 ounces of gold at the market price 3 months from now.
• C)has an obligation to buy 200 ounces of gold but only if the price of gold increases within the next 3 months.
• D)is expecting the price of gold to decrease and thus is locking in a selling price.
• E)will profit if the price of gold is higher three months from now.

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Definitions:

Toy Manufacturing

The process of designing, producing, and distributing toys.

Assembly

The process of putting together components or parts to form a complete product or system.

Painting

The process or art of using paint to create a picture, design, or decorative coating on a surface.

Middle Managers

Employees who manage the activities of other managers and possibly also staff, positioned between the executive and the frontline managers.