There is a futures contract for the purchase of 100 bushels of wheat at $2.50 per bushel. At the end of the day when the market price of wheat increases to $3.00 per bushel:
A. the seller (short position) needs to transfer $50 to the buyer (long position).
B. the buyer (long position) needs to transfer $50 to the seller (short position).
C. nothing happens since with a futures contract all payments are made at the settlement date.
D. nothing happens since marked to market adjustments only take place when the market price falls below the contract price.
Answer: A
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