A futures contract calls for delivery of 60,000 pounds of soybean oil.What happens to the seller of a soybean oil futures contract at 41 cents per pound if the futures price closes the next day at 42 cents per pound?
A) The contract is marked to market with a $600 loss.
B) The contract is marked to market with a $600 gain.
C) Futures contracts are voided if the price increases prior to expiration.
D) Nothing happens until the expiration of the contract.

Question

Quizplus · Accepted Answer

When a futures contract is marked to market, the gain or loss is realized and settled daily. In this case, the seller would have a loss of 1 cent per pound, which would total $600 (60,000 pounds x $0.01).

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