A Gold Mining Firm Sells Futures Contracts Worth 1000 Ounces

question 4

Multiple Choice

A gold mining firm sells futures contracts worth 1000 ounces at a price of $800 per ounce for maturity one year from today.If gold futures prices decrease to $798 per ounce,what is the cash flow to the producer?

• A)-$2000
• B)$2000
• C)$0
• D)$800,000
• E)$798,000

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Definitions:

Stewardship

The responsibility of managing or looking after something, often implying a commitment to wise and ethical management of resources or organizations.

Leadership Role

The function or position of leading a group or organization, entailing responsibilities such as guidance, direction, and decision-making.

Foresight

The ability to anticipate future events, trends, or outcomes and plan accordingly.

Future Trends

Predicted developments or directions in a particular area of interest over the coming years, often based on current data, patterns, and projections.