Suppose You Agree to Purchase One Ounce of Gold for $984

question 49

Multiple Choice

Suppose you agree to purchase one ounce of gold for $984 any time over the next month. The current price of gold is $970. The spot price of gold then falls to $960 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 next business day?

• A) $10
• B) $5
• C) $0
• D) -$5
• E) -$10

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