A manufacturer needs to buy 20,000 ounces of silver in three months. The current spot price is

=23.50/

. The futures price with a settlement date in three months is

=23.75/

. Each silver futures contract is for 5,000 ounces. In three months the following occurs -

=24.00/

and the spot price is $24.00/oz.

1.

. The manufacturer has

I. A gain in the futures market of $5,000

II. A loss in the spot market of $10,000

III. A net gain of $5,000

a. I only

b. II and III

c. I, II, and III

d. I and II

e. III only