A Speculator Takes a Long Position in a Futures Contract

question 5

Multiple Choice

A speculator takes a long position in a futures contract on a commodity on November 1,2012 to hedge an exposure on March 1,2013.The initial futures price is $60.On December 31,2012 the futures price is $61.On March 1,2013 it is $64.The contract is closed out on March 1,2013.What gain is recognized in the accounting year January 1 to December 31,2013? Each contract is on 1000 units of the commodity.

• A)$0
• B)$1,000
• C)$3,000
• D)$4,000

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Definitions:

Activated T Cells

T lymphocytes that have been stimulated by an antigen to proliferate and carry out immune responses.

Cytotoxic

Referring to a substance or process which is toxic to cells, causing their damage or destruction.

Memory

the cognitive function that enables the storage and retrieval of information over time.

Anaphylaxis

A severe, potentially life-threatening allergic reaction that can occur rapidly.