Suppose You Agree to Purchase One-Ounce of Gold for $382

question 36

Multiple Choice

Suppose you agree to purchase one-ounce of gold for $382 any time over the next month. The current price of gold is $380. The spot price of gold then falls to $377 the next day. If the agreement is represented by a futures contract marking to market on a daily basis as the price changes, what is your cash flow at the end of the business on the next day?

• A) $0.00.
• B) $3.00.
• C) $5.00.
• D) -$3.00.
• E) -$5.00.

---

Definitions:

Planning

The process of thinking about and organizing the activities required to achieve a desired goal, involving the creation and maintenance of a plan.

Controlling

The process of monitoring performance, comparing it with goals and standards, and taking corrective action when necessary.

Improving

is the process of making something better or more effective through changes or adjustments.

Planning Process

A systematic approach to defining goals, developing strategies, and outlining tasks and schedules to achieve the desired outcomes.