Suppose You Agree to Purchase One-Ounce of Gold for $382

question 36

Multiple Choice

Suppose you agree to purchase one-ounce of gold for $382 any time over the next month. The current price of gold is $380. The spot price of gold then falls to $377 the next day. If the agreement is represented by a futures contract marking to market on a daily basis as the price changes, what is your cash flow at the end of the business on the next day?

• A) $0.00.
• B) $3.00.
• C) $5.00.
• D) -$3.00.
• E) -$5.00.