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On March 1, you contract to take delivery of 1 ounce of gold for RM415. The agreement is good for any day up to April 1. Throughout March, the price of gold hit a low of RM385 and hit a high of RM435. The price settled on March 31 at RM420, and on April 1st you settle your futures agreement at that price. Your net cash flow is:

Respuesta :

Answer:

Step-by-step explanation:

Here's how to calculate your net cash flow:

1. **Contract Price:** You agreed to buy 1 ounce of gold for RM415.

2. **Settlement Price:** You settled the agreement on April 1st at RM420 per ounce.

3. **Profit/Loss per Ounce:** Since the settlement price (RM420) is higher than the contract price (RM415), you made a profit of RM420 - RM415 = RM5 per ounce.

4. **Net Cash Flow:** This depends on whether the question refers to the profit per ounce **(a)** or the total profit considering the 1-ounce purchase **(b)**.

**(a) Profit per Ounce:**  In this case, your net cash flow is the profit you made per ounce, which is RM5.

**(b) Total Profit:** If the question refers to the total profit considering the 1-ounce purchase, you need to multiply the per-ounce profit by the quantity (1 ounce). So, the net cash flow would be RM5/ounce * 1 ounce = RM5.

Since the question doesn't explicitly state whether we're looking at the profit per ounce or the total profit, both answers (RM5 for (a) and (b)) are technically correct depending on the intended interpretation.

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