Today,you Purchased a Futures Contract Obligating You to Purchase 100

question 35

Multiple Choice

Today,you purchased a futures contract obligating you to purchase 100 troy ounces of gold for $1,218 per ounce any time over the next month.Assume the spot price of gold falls to $1,216 tomorrow.What will be your cash flow tomorrow for this contract?

• A)−$400
• B)$200
• C)$0
• D)−$200
• E)$400

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Definitions:

Coefficient of Correlation

A statistical measure that calculates the strength and direction of the relationship between two variables.

Linear Relationship

A type of correlation where there is a constant rate of change between two variables.

Dependent Variable

A variable in an experiment or study whose changes are determined by the presence or manipulation of one or more independent variables.

Independent Variable

A variable in statistical analysis that is manipulated or categorized to observe its effect on a dependent variable.