You are a manufacturer of gold jewelry holding 100 troy ounces of gold. To protect the value of the gold holding, you sold a futures contract for 100 troy ounces of gold with a delivery date 90 days from today. The futures contract is priced $1,218 per ounce today. Assume the futures price falls to $1,216 tomorrow. What will be daily settlement for this contract tomorrow?

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you have sold a futures contract if prices fall you have a positive payoff ... View the full answer