If you sell in February a bond future contract for 120 that matures on June 30 of the same year, and at the maturity date the same future sells for 110, you have a ________ of $________.
A) loss; 10000
B) loss; 10
C) profit; 10000
D) profit; 10

Question

Quizplus · Accepted Answer

When you sell a futures contract at a higher price (120) and buy it back (or it settles) at a lower price (110), you make a profit on the difference. The difference here is 10 points. In bond futures, each point typically represents $1,000, so a 10-point difference results in a $10,000 profit.

If You Sell in February a Bond Future Contract for 120