Suppose you bought one gold futures contract for August delivery at its 2 April settlement price of $279/oz. Assume that both the last trading date and the delivery date are 27 August. Assume that your borrowing and lending rates are 8% per year, and that you borrow to meet any mark-to-market cash outflows and lend any mark-to-market losses.

a. If the gold futures price remains unchanged until 26 August, then falls to $250/oz. on 27 August, what is your profit or loss per ounce?

b. If, instead, the gold futures price falls to $250/oz. on 3 April and stays there until the delivery date, what is your profit or loss?

c. If, instead, the gold futures price rises to $420/oz. on 3 April stays there, and then falls to $250/oz. on 27 August then what is your profit or loss?

d. Given that money has time value, which of the foregoing price scenarios is most attractive: a, b, or c? Briefly explain why.