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Question
Uptown Jewelers purchased a futures contract on 200 ounces of gold to be exchanged 3-months from now. As the contract holder, Uptown Jewelers:A. has the right, but not the obligation, to purchase 200 ounces of gold 3 months from now.
B. has the obligation to purchase 200 ounces of gold at the market price three months from now.
C. has an obligation to buy 200 ounces of gold but only if the price of gold increases within the next 3 months.
D. is expecting the price of gold to decrease and thus is locking in a selling price.
E. will profit if the price of gold is higher three months from now.
Answer
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