If the futures price falls,
1) the short position sustains a profit
2) the short position sustains a loss
3) the long position sustains a loss
4) the long position sustains a profit
A)1 and 3
B)1 and 4
C)2 and 3
D)2 and 4

Question

If the futures price falls,​
1) the short position sustains a profit
2) the short position sustains a loss
3) the long position sustains a loss
4) the long position sustains a profit
A)​1 and 3
B)​1 and 4
C)2 and 3
D)2 and 4

Quizplus · Accepted Answer

If the futures price falls, the short position (which is betting on the price going down) sustains a profit, while the long position (which is betting on the price going up) sustains a loss. Therefore, choice 1 is correct, but choice 4 is incorrect. Choice 2 is also correct, but choice 3 is incorrect.

If the Futures Price Falls,​

If the Futures Price Falls,