You Buy One Futures Contract for 5,000 Bushels of Soybeans

question 88

Multiple Choice

You buy one futures contract for 5,000 bushels of soybeans with a settlement price of $6.92 per bushel. If the price is $7.58 per bushel at the contract expiration, what is your payoff?

• A) -$37,900
• B) -$3,300
• C) $2,130
• D) $3,300
• E) $37,900

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, also referred to as shareholders' equity.

Par Common Stock

The face value of a common stock, which is the stated value per share set in the corporate charter and used in the balance sheet under shareholders' equity.

At Cost

A term used to describe goods or services being sold or valued at their original purchase price, without any markup or profit margin.

Cumulative

An adjective describing something that increases or accumulates over time, often used in the context of dividends or data.