A Futures Contract on Gold States That Buyers and Sellers

question 47

Multiple Choice

A futures contract on gold states that buyers and sellers agree to make or take delivery of an ounce of gold for $400 per ounce. The contract expires in 3 months. The current price of gold is $350 per ounce. If the price of gold rises and continues to rise every day over the 3 month period, then when the contract is settled, the buyer will _____ and the seller will ____.

• A) lose; gain
• B) gain; lose
• C) gain; break even
• D) gain; gain
• E) lose; lose

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Definitions:

Assortative Mating

The idea that people are attracted to others who are similar to them in some kind of social hierarchy.

Equity Theory

The idea that people are motivated to maintain a sense of fairness or equity, whereby both partners feel that the proportion of outcomes (rewards) to inputs (costs) that each receives is roughly equal.

Social Hierarchy

The organization of individuals within a society that is ranked from higher to lower based on power, status, or other criteria.

Infatuation

A state of intense but short-lived passion or admiration for someone or something, often without a deep understanding or commitment.