You purchased one corn future contract at $2.29 per bushel.What would be your profit (loss)at maturity if the corn spot price at that time were $2.10 per bushel? Assume the contract size is 5,000 ounces and there are no transactions costs.

Question

Quizplus · Accepted Answer

The profit or loss on a futures contract is calculated as (Futures price at purchase - Futures price at maturity) * Contract size.

In this case, the futures price at purchase is $2.29 per bushel, and the contract size is 5,000 ounces. Therefore, the total contract value is:

$2.29/bushel * 5,000 ounces = $11,450

If the spot price of corn at maturity is $2.10 per bushel, then the futures price at maturity would also be approximately $2.10 per bushel (assuming no storage costs or other factors that might influence the futures price).

So the profit or loss on the futures contract would be:

($2.29/bushel - $2.10/bushel) * 5,000 ounces = $950 loss

Therefore, the correct answer is C) $950 loss.

You Purchased One Corn Future Contract at $2