You purchased one silver future contract at $3 per ounce.What would be your profit (loss)at maturity if the silver spot price at that time is $4.10 per ounce? Assume the contract size is 5,000 ounces and there are no transactions costs.

Question

Quizplus · Accepted Answer

The profit or loss in a futures contract is calculated as the difference between the spot price at maturity and the contract price at which the contract was purchased, multiplied by the contract size. 
Profit/Loss = (Spot price at maturity - Contract price)* Contract size 
Here, the contract price is $3 per ounce, the spot price at maturity is $4.10 per ounce, and the contract size is 5,000 ounces. 
Profit/Loss = ($4.10 - $3) * 5,000 = $5,500 profit. 
Therefore, the correct answer is (B).

You Purchased One Silver Future Contract at $3 Per Ounce