If you sell in February a bond future contract for 125 that matures on June 30 of the same year, and at the maturity date the same future sells for 105, you have a ________ of $________.
A) loss; 20000
B) loss; 20
C) profit; 20000
D) profit; 20

Question

Quizplus · Accepted Answer

When you sell a futures contract at a higher price and then it settles at a lower price, you profit from the difference. In this case, selling at 125 and settling at 105 means you've made a profit. The specific dollar amount of profit or loss per point depends on the contract size and the market, but without that detail, the principle of selling high and buying low (or settling at a lower price) indicates a profit scenario. The choices provided don't specify the contract size directly, so the exact monetary value might be context-dependent, but the principle of profit is correct.

If You Sell in February a Bond Future Contract for 125