By selling short a futures contract of $100,000 at a price of 96,you are agreeing to deliver ________ face value securities for ________.
A) $100,000; $104,167
B) $96,000; $100,000
C) $100,000; $96,000
D) $100,000; $100,000

Question

Quizplus · Accepted Answer

When selling short a futures contract, the seller is agreeing to deliver the underlying asset at a future date at a predetermined price (the futures price). In this case, the futures contract has a face value of $100,000 and is sold at a price of 96, meaning the seller will receive $96,000 for the contract. Therefore, the seller is agreeing to deliver $100,000 worth of securities for $96,000. The correct choice is C.

By Selling Short a Futures Contract of $100,000 at a Price