A futures contract seller is obligated to deliver 5,000 bushels of soybeans for $5.00 per bushel at expiration.If soybean futures close at $5.10 the next day, the seller:
A)Has a profit of $500 thus far on the contract
B)Has a loss of $500 thus far on the contract
C)Has no profit or loss, but is still obligated to deliver 5,000 bushels at $5.00
D)Will receive a cheque for $500 from the buyer of the contract

Question

Quizplus · Accepted Answer

Since the futures price increased to $5.10, the seller now has a loss on the contract. The loss can be calculated as the difference between the contract price and the current market price multiplied by the quantity of bushels specified in the contract: 
($5.10 - $5.00) x 5,000 bushels = $500 loss. So, the correct choice is B - the seller has a loss of $500 thus far on the contract.

A Futures Contract Seller Is Obligated to Deliver 5,000 Bushels