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

---

Definitions:

Respondent Behavior

Behavior that occurs as an automatic response to some stimulus.

Generalization

The tendency, once a response has been conditioned, for stimuli similar to the conditioned stimulus to elicit similar responses.

Operant Conditioning

A type of learning in which behavior is strengthened if followed by a reinforcer or diminished if followed by a punisher.

Observational Learning

Acquiring behaviors through the observation and replication of others' actions.