On March 1, you contract to take delivery of 1 ounce of gold for £415.The agreement is good for any day up to April 1.Throughout March, the price of gold hit a low of £385 and hit a high of £435.The
Price settled on March 31 at £420, and on April 1st you settle your futures agreement at that price.
Your net cash ﬂow is:

Question

Quizplus · Accepted Answer

On March 1, the agreement was made to take delivery of 1 ounce of gold for £415. On April 1, when settling the futures agreement, the price of gold was £420. So, the profit made is £5.
Net cash flow = Profit/Loss + Initial Investment
Initial Investment = £415
Profit/Loss = £5 - £415 = £-410
Net cash flow = £-410
So, the correct answer is D (£5).

On March 1, You Contract to Take Delivery of 1