You purchased one July futures contract of pork bellies at $.59 per lb.One contract represents 40,000 lbs.of pork bellies.By the end of the day, the price had fallen to $.57 per lb.How much did the value of your contract change during the day?

Question

Quizplus · Accepted Answer

The initial value of the contract is calculated as follows:
$0.59/lb x 40,000 lbs = $23,600
The new value of the contract after the price fell is:
$0.57/lb x 40,000 lbs = $22,800
The difference between the initial value and the new value is:
$23,600 - $22,800 = $800
Since the price fell, the value of the contract decreased by $800. Therefore, the correct answer is C.

You Purchased One July Futures Contract of Pork Bellies at $.59