if you sell a futures contract on the S&P 500 Index at a price of 450 and the index rises to 500, you will ________.
A)lose $12500
B)gain $12500
C)lose $50
D)gain $50

Question

Quizplus · Accepted Answer

When you sell a futures contract, you are essentially agreeing to sell the underlying asset (in this case, the S&P 500 Index) at a specific price at a future date. If the price of the asset rises above the price at which you sold the contract, you will incur losses. In this case, the price of the S&P 500 Index has risen from 450 to 500, resulting in a loss of $50 per contract. As futures contracts are typically for large quantities of the underlying asset, this loss would be magnified accordingly.

If You Sell a Futures Contract on the S&P 500