A Futures Contract on Gold States That Buyers and Sellers

question 34

Multiple Choice

A futures contract on gold states that buyers and sellers agree to make or take delivery of an ounce of gold for $400 per ounce. The contract expires in 3 months. The current price of gold is $350 per ounce. If the price of gold rises and continues to rise by $1 every day over the 3 month period, then when the contract is settled, the buyer will _____ and the seller will ____.

• A) lose; gain
• B) gain; lose
• C) gain; break even
• D) gain; gain
• E) lose; lose

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Definitions:

Wages And Salaries

Payments made to employees for their labor or services, either hourly (wages) or fixed over a time period (salaries).

Spending Variance

The difference between the actual amount of cost incurred and the budgeted or expected amount of cost.

Births

The occurrence of an organism coming into life or existence, relevant in demographic and epidemiological studies.

Spending Variance

The difference between the budgeted amount of expenses and the actual amount spent.