A Speculator Takes a Long Position in a Futures Contract

question 7

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) $3,000
• C) $1,000
• D) $4,000

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