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 value of the contract is calculated by multiplying the contract price by the number of pounds represented by the contract.

So, initial value = $.59/lb x 40,000 lbs = $23,600
and final value = $.57/lb x 40,000 lbs = $22,800

The change in value is the difference between the initial value and final value:
$23,600 - $22,800 = $800 decrease in value.

Therefore, the answer is C, it fell by $800.

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