How Can a Gold Futures Contract Be Used as a Hedge

question 50

Multiple Choice

How can a gold futures contract be used as a hedge against a potentially dramatic decrease in the price of the gold needed as an input into the production of computer microprocessors?

• A) The computer company should sell gold futures contracts.
• B) The computer company should sell more gold futures contracts than it should buy.
• C) This is a standard business situation, which would be favorable if it were to happen, so no hedge is needed.
• D) The computer company should lower its finished product prices now in anticipation of the decrease in the price of gold inputs.

Explain the processes involved in the formation and evolution of magma, including partial melting and magma differentiation.

Understand how heat is transferred and lost within the Earth, particularly in the context of magma solidifying.

Describe the role of tectonic settings and processes in the formation and movement of magma.

Recognize the significance of water in the formation of magma, especially in subduction zones.

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