An Investor Sells a Futures Contract an Asset When the Futures

question 5

Multiple Choice

An investor sells a futures contract an asset when the futures price is $1,500.Each contract is on 100 units of the asset.The contract is closed out when the futures price is $1,540.Which of the following is true

• A) The investor has made a gain of $4,000
• B) The investor has made a loss of $4,000
• C) The investor has made a gain of $2,000
• D) The investor has made a loss of $2,000

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Definitions:

Proper Reject

In the context of contracts or sales, a proper reject refers to the legitimate refusal to accept goods or services because they do not meet the agreed-upon specifications or standards.

Perfect Tender Rule

A principle in commercial law requiring goods delivered under a sales contract to exactly meet the terms of the agreement.

Koch Petroleum

A division within Koch Industries, primarily involved in the refining and distribution of petroleum products.

Reasonable Grounds

Reasonable grounds refers to a set of facts or circumstances that would lead a person of ordinary caution and prudence to believe or suspect that a certain fact or event has occurred or is the case.