A decrease in the TSX 60 index futures to 400 would lead to a __________ on each long TSX 60 futures contract.

Question

Quizplus · Accepted Answer

To calculate the profit or loss on a futures contract, you need to take the difference between the price at which you bought the contract and the price at which you sold it, and multiply it by the contract size. In this case, assuming a contract size of $200,000, a decrease in the futures price to 400 would result in a loss of (420 - 400) x $200,000 = $4,000 per contract. Since the question asks for the loss on each long contract, the answer is (C) loss of $5000, rounding to the nearest thousand.

A Decrease in the TSX 60 Index Futures to 400