A Milling Company Buys a Futures Contract That Requires It

question 22

Multiple Choice

A milling company buys a futures contract that requires it to take delivery of 5,000 bushels of wheat at a price of $6.75 per bushel.Next day the price of the future is $6.80.The miller:

• A) must pay an extra $0.05 a bushel into its margin account.
• B) can withdraw $0.05 from its margin account.
• C) does not need to do anything until the contract matures.
• D) can't say without knowing what happened to the spot price.

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Definitions:

Marry

To enter into a legally recognized union with someone, typically as recognized by law or custom, establishing a partnership that is intimately and socially acknowledged.

Married

A legal or formally recognized union of two people as partners in a personal relationship.

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Individuals in the developmental stage of transition from childhood to adulthood, typically ranging from ages 10 to 19, characterized by significant physical, psychological, and social changes.

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The act of intentionally causing one's own death, often as a response to despair, mental disorder, or distress.