A gasoline distributor buys a gasoline futures contract that requires acceptance of 42,000 gallons of gasoline at $0.94 per gallon.How is the account marked to market if gasoline futures close the next day at $0.97?
A) A loss of $1,260 is posted to the account.
B) A gain of $1,260 is posted to the account.
C) A loss of $12,600 is posted to the account.
D) A gain of $12,600 is posted to the account.

Question

Quizplus · Accepted Answer

The gain is calculated by taking the difference between the purchase price and the closing price and multiplying it by the number of gallons in the contract: ($0.97 - $0.94) x 42,000 = $1,260 gain. Therefore, choice B is correct.

A Gasoline Distributor Buys a Gasoline Futures Contract That Requires