In the futures markets,the price of a derivative contract for gold is based on:
A) prices of gold mining companies.
B) price of gold in the spot markets.
C) price of gold in the forward markets.
D) price of gold commodity indexes.

Question

Quizplus · Accepted Answer

The price of a derivative contract for gold in the futures markets is based on the price of gold in the spot markets, which is the current market price of physical gold. This is because futures contracts allow traders to buy or sell gold at a future date at a predetermined price, and the price of the futures contract reflects the expected price of gold at that future date. The other options (A, C, and D) are not directly related to the price of gold in the spot markets and therefore do not impact the price of a gold futures contract.

In the Futures Markets,the Price of a Derivative Contract for Gold