John and Tom Enter into a Futures Contract in Which

question 120

Multiple Choice

John and Tom enter into a futures contract in which John agrees to deliver 500 crates of coffee to Tom one year from now. Tom agrees to pay a price of $200 per crate. A year from now, John and Tom find that the market price of coffee is $210 per crate. How might they make a cash settlement on the contract?

• A) John will offer $5,000 to Tom and deliver the 500 crates of coffee.
• B) Tom will offer $5,000 to John and deliver the 500 crates of coffee.
• C) John will offer $5,000 to Tom and not deliver any crates of coffee.
• D) Tom will offer $5,000 to John and not deliver any crates of coffee.

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Definitions:

Good Continuation

Good continuation is a principle in Gestalt psychology that individuals have a tendency to perceive continuous patterns in stimuli rather than abrupt changes.

Reversible Figures

Visual illusions where the brain switches between seeing two different images or perspectives in the same picture.

Perceptual Parsing

The cognitive process by which the brain segments and organizes sensory input into meaningful units or objects, allowing for the interpretation of the visual and auditory world.

Figure-Ground Relationships

A visual perception principle that involves distinguishing an object (the figure) from its surrounding area (the ground).