You Purchased One Oil Future Contract at $70 Per Barrel

question 53

Multiple Choice

You purchased one oil future contract at $70 per barrel. What would be your profit (loss) at maturity if the oil spot price at that time is $73.12 per barrel? Assume the contract size is 1,000 barrels and there are no transactions costs.

• A) $3.12 profit
• B) $31.20 profit
• C) $3.12 loss
• D) $31.20 loss
• E) None of the options are correct.

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Definitions:

Board of Directors

A group of individuals elected by shareholders to oversee the management and make major decisions for a corporation.

Officer

An individual holding a position of authority or command, especially within a governmental, military, or corporate structure, responsible for enforcing laws or policies.

Shareholders

Investors in a corporation, who own the corporation.

Dividends

Payments made by a corporation to its shareholders, usually derived from profits.