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

question 55

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 next business day?

• A) $0
• B) $3
• C) $5
• D) -$3
• E) -$5

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