You buy one futures contract for 5,000 bushels of soybeans with a settlement price of $6.92 per bushel. If the price is $7.58 per bushel at the contract expiration, what is your payoff?
A) -$37,900
B) -$3,300
C) $2,130
D) $3,300
E) $37,900

Question

Quizplus · Accepted Answer

The payoff from the futures contract is calculated as the difference between the contract settlement price and the price at expiration, multiplied by the number of units in the contract. Here, the calculation is (7.58 - 6.92) * 5,000 = 0.66 * 5,000 = $3,300.

You Buy One Futures Contract for 5,000 Bushels of Soybeans