If you buy in April a stock index future contract on the S&P 500 index at the price of 800 points that matures on June 30 of the same year and on the maturity date the S&P 500 Index is at 795, you have a ________ of $________.
A)loss; 1250
B)loss; 5
C)profit; 1250
D)profit; 5

Question

Quizplus · Accepted Answer

Since the S&P 500 Index decreased from 800 to 795, the value of the index future contract decreased as well. The loss can be calculated as (800-795) x $250 = $1,250. Therefore, the correct answer is A) loss; 1250.

If You Buy in April a Stock Index Future Contract