The Seller of a Pork Bellies Futures Contract at $0

question 5

Multiple Choice

The seller of a pork bellies futures contract at $0.41 per pound noted that the closing price of pork bellies was $0.44 today.What will happen to this contract,which requires delivery of 40,000 of pork bellies at expiration?

• A) A loss of $400 is posted to the account.
• B) A gain of $400 is posted to the account.
• C) A loss of $1,200 is posted to the account.
• D) A gain of $1,200 is posted to the account.

---

Definitions:

Solubility

The ability of a substance (solute) to dissolve into another substance (solvent), forming a solution at a specific temperature and pressure.

Dissolve

To form a solution by mixing evenly with a liquid, causing a solid to become incorporated into the liquid so it becomes homogeneous.

Precipitate

A solid substance that forms in a solution through a chemical reaction and settles out of the solution.

Conduct

To transmit or facilitate the transfer of something, such as electricity or heat, or to carry out a particular action or task.