You Purchased Five August 13 Futures Contracts on Soybeans at a Price

question 30

Multiple Choice

You purchased five August 13 futures contracts on soybeans at a price quote of 1056′6. Each contract is for 5,000 bushels with the price quoted in cents and 1/8ths of a cent per bushel. Assume the contract price is 1061′4 when you close out your contract six weeks from now. What will be your total profit or loss on this investment?

• A)$950.25
• B)$1,187.50
• C)$6,480.75
• D)$16,200.50
• E)$24,000.00

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Definitions:

Operating

Relating to the day-to-day business activities involved in running a company, such as selling, managing, and producing goods or services.

Peripheral Activities

Operations or tasks that are not central to the main business or objectives of an organization, but may still generate revenue or provide support.

Cash Dividend

A payment made by a company out of its earnings to shareholders in the form of cash.

Retained Earnings

The portion of net income left over after dividends have been distributed to shareholders, reinvested into the company.