Suppose the standard size of a copper futures contract is 25,000 pounds each. At initiation of a futures contract, the futures price is $22.50 per pound. At expiration of the futures contract, the copper price is $19.50 per pound. Which of the following is true?
A) The short profits by $3 per pound.
B) The long profits by $3 per pound.
C) Demand for copper has risen relative to its supply.
D) Undetermined

Question

Quizplus · Accepted Answer

Since the futures price at initiation was $22.50 and the price at expiration was $19.50, the price decreased by $3 per pound. In a futures contract, the short profits when the price of the underlying asset decreases, so the short (seller) profits by $3 per pound.

Suppose the Standard Size of a Copper Futures Contract Is