If you buy a futures contract on the S&P 500 Index at a price of 450 and the index rises to 500,you will ________.
A) lose $12,500
B) gain $12,500
C) lose $50
D) gain $50

Question

Quizplus · Accepted Answer

When you buy a futures contract on the S&P 500 Index at a price of 450 and the index rises to 500, you will gain $12,500. This is because a futures contract is a financial agreement to buy or sell an underlying asset at a predetermined price and date in the future. In this case, you bought a futures contract at a price of 450, and when the index rises to 500, the futures contract has increased in value by 50 points. Since each point is worth $250, the gain would be 50 points multiplied by $250, which equals $12,500.

If You Buy a Futures Contract on the S&P 500