You bought one soybean future contract at $5.13 per bushel.What would be your profit (loss)at maturity if the wheat spot price at that time were $5.26 per bushel? Assume the contract size is 5,000 ounces and there are no transactions costs.

Question

Quizplus · Accepted Answer

One bushel is equivalent to 60 pounds, so one contract size of 5,000 ounces is equivalent to 5,000/16 = 312.5 bushels. 
Profit (loss) = (spot price at maturity - purchase price) x contract size
Profit (loss) = ($5.26 - $5.13) x 312.5 = $4,062.5/100 = $40.625
Since the futures price increased, the buyer of the contract made a profit of $40.625, which is equal to $650 profit (since the contract size is in bushels and not ounces). Therefore, the answer is B.

You Bought One Soybean Future Contract at $5