A soybean oil contract calls for delivery of 60,000 pounds.What happens to the seller of a soybean futures contract at 16 cents per pound if the futures price closes the next day at 14 cents per pound?
A) The contract is marked to market with a $1,200 loss.
B) The contract is marked to market with a $1,200 gain.
C) Futures contracts are voided if price increases before expiration.
D) Nothing happens until the expiration of the contract.

Question

Quizplus · Accepted Answer

The seller gains because the price decreased by 2 cents per pound, resulting in a gain of 60,000 pounds * $0.02 = $1,200.

A Soybean Oil Contract Calls for Delivery of 60,000 Pounds