Chapter 01 · Section 1.1
Watchmaker Case Study - Question 2
What our Watchmaker needs is the choice whether or not to use price protection. That means, the Watchmaker needs to buy
c) the obligation to buy 1,000 ounces of gold at $400/oz in two months.
No. The obligation to buy 1,000 ounces would be the result of buying a forward or futures contract.
a) the right to sell 1,000 ounces of gold at $400/oz in two months.
b) the right to buy 1,000 ounces of gold at $400/oz in two months.
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