If You Hold the Futures Contract Until September 15^th and the Spot

question 27

Multiple Choice

If you hold the futures contract until September 15^th and the spot rate for pounds on September 15^th is $1.67 per pound,you will:

• A) not exercise the futures contract.
• B) lose on your position by $1,250.
• C) gain on your position by $1,250.
• D) break even by the amount of the margin.

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Definitions:

Shift

A change in the position of a demand or supply curve, indicating a change in the quantity demanded or supplied at various prices.

Price Reductions

A decrease in the selling price of goods or services, often used to stimulate demand or clear inventory.

Current Demand

The present level of desire or need for a particular product or service in the market, which can be influenced by prices, consumer preferences, and economic conditions.

Computer Manufacturers

Companies specializing in the design, assembly, and sale of computers and computer-related products.