On April 1,2014,Button Industries Enters into an Agreement with Bows

question 35

Essay

On April 1,2014,Button Industries enters into an agreement with Bows Incorporated to lock in the price of cotton.Button agrees to purchase (and Bows agrees to sell)100,000 pounds of cotton at $1.19 per pound,six months from the date of agreement.On October 1,2014,the price of cotton is $1.17 per pound.The contract allows for net settlement.
Required:
Determine the net settlement on the forward contract.

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Definitions:

Unorganized

Lacking orderly structure, arrangement, or coordination.

Enzyme

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The branch of physics that deals with the relationships between heat and other forms of energy, and how these affect matter.

Usable Energy

energy that is available for doing work in a system, after accounting for energy lost as heat or in other unusable forms.