Suppose You Buy an Asset at $70 and Sell a Futures

question 56

Multiple Choice

Suppose you buy an asset at $70 and sell a futures contract at $72.What is your profit if,prior to expiration,you sell the asset at $75 and the futures price is $78?

• A)-$1
• B)$2
• C)$1
• D)-$6
• E)none of the above

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Definitions:

Deep Recession

A particularly severe and prolonged period of economic decline, characterized by significant falls in income and employment.

Aggregate Demand

Aggregate demand represents the total demand for goods and services within an economy at a given overall price level and in a given time period.

Aggregate Demand Curve

A curve that shows the relationship between the overall price level in the economy and the total demand for goods and services.

Price Level

The aggregate average price of goods and services in the economy at present.