​A Firm Sells a Currency Futures Contract, and Then Decides

question 75

Multiple Choice

​A firm sells a currency futures contract, and then decides before the settlement date that it no longer wants to maintain such a position. It can close out its position by:

• A) ​buying an identical futures contract.
• B) ​selling an identical futures contract.
• C) ​buying a futures contract with a different settlement date.
• D) ​selling a futures contract for a different amount of currency.
• E) ​purchasing a put option contract in the same currency.

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Definitions:

Process Costing

A costing method used for homogeneous products, where costs are accumulated over a period and assigned to large numbers of identical units.

Cost Per Equivalent Unit

A calculation used in process costing that determines the cost associated with a single unit of output, adjusting for partial completion of units in the production process.

Materials Cost

The cost of raw materials used to produce goods.

Process Costing

A method of costing that is used in industries where production is continuous and the product is indistinguishable from unit to unit.