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

Calculate expected outcomes using mortality tables in insurance risk assessment.

Determine contribution amounts required to achieve specific financial goals in retirement planning.

Calculate Social Security benefits based on lifetime earnings and benefit formulas.

Understand the financial management of universal life insurance policies, including cash value and premium payments.

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Definitions:

Marginal Costs

The increase in cost due to the production of one further unit of a product or service.

Total Cost Function

An equation that shows the overall cost incurred by a firm in the production process, including both fixed and variable costs, as a function of the quantity of output produced.

Fixed Cost

Business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Price Elastic

describes the responsiveness of the quantity demanded of a good to a change in its price.