There Is a Futures Contract for the Purchase of 1,000

question 90

Multiple Choice

There is a futures contract for the purchase of 1,000 bushels of corn at $3.00 per bushel. At the end of the day when the market price of corn falls to $2.50:

• A) the buyer (long position) needs to transfer $500 to the seller (short position).
• B) the seller (long position) needs to transfer $500 to the buyer (short position).
• C) nothing happens since marked to market adjustments only occur if the market price rises above the contract price.
• D) nothing happened since no funds are transferred until the settlement date.

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