Young Growth Co$.($YGC$)$ has just completed the construction of its new gold mine. The directors have introduced a policy that the company will hedge up to $40\%$ of the mine$$s annual production to protect against volatility in the price of gold. The CEO of YGC has asked for advice about hedging and alternative approaches that could be used to satisfy their new policy.

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Which one of the following statements is true about the types of financial derivative that YGC should consider?

Question $7$ options:

a$)$

If YGC purchases a put option for the gold, it will have to deliver the gold on the expiry date of the option at the strike price.

b$)$

If YGC enters into a forward contract to deliver the gold at a future date, the spot price will be received at the time of delivery.

c$)$

If YGC enters into a futures contract, it will be required to maintain a margin account with the broker that must be settled daily, and cash must be deposited whenever the margin balance falls below a minimum level.

d$)$

A futures contract has counterparty risk and therefore is more speculative than a forward contract.