You purchased one S&P 500 Index futures contract at a price of 950 and closed your position when the index futures was 947,you incurred:
A)a loss of $1,500.
B)a gain of $1,500.
C)a loss of $750.
D)a gain of $750.
E)None of the above.

Question

Quizplus · Accepted Answer

To calculate the profit or loss, we need to use the following formula:

Profit or loss = (Selling Price - Buying Price) x Multiplier

In this case, the multiplier for S&P 500 Index futures is $250, so:

Profit or loss = (947 - 950) x $250
Profit or loss = -$750

Since the result is negative, it means there is a loss of $750. Therefore, the best choice is C, "a loss of $750."

You Purchased One S&P 500 Index Futures Contract at a Price