The Basis for a 5000 Bushel Wheat Future Is

question 13

Multiple Choice

The basis for a 5000 bushel wheat future is $.50, and the current spot price increases by $.15. A person who owns the asset and is short in the futures market will

• A) neither gain nor lose.
• B) gain $750.
• C) gain $3250.
• D) lose $3250.

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Definitions:

Accepted Accounting Principles

Standards and conventions in accounting that provide guidelines for financial reporting, often referred to as Generally Accepted Accounting Principles (GAAP).

Inflationary Economies

Economies experiencing a sustained increase in the general price level of goods and services over a period of time.

Political Colonialism

The practice or policy of controlling a country or area by establishing colonies there, often involving economic exploitation and cultural domination.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.