You Hold One Long Corn Futures Contract That Expires in April

question 4

Multiple Choice

You hold one long corn futures contract that expires in April. To close your position in corn futures before the delivery date you must

• A) buy one May corn futures contract.
• B) buy two April corn futures contract.
• C) sell one April corn futures contract.
• D) sell one May corn futures contract.

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Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust fully to changes.

Lemonade Stand

A small business venture, often used as an example for basic business principles, where lemonade is sold, typically by younger entrepreneurs.

Fixed Cost

Expenses that do not vary with the level of output or sales, such as rent, salaries, or insurance premiums.

Variable Cost

Expenses that vary in proportion to the volume of goods or services produced in a business.