On 31 December 2001,the All Ordinaries Index Closed at 3427

question 2

Multiple Choice

On 31 December 2001,the All Ordinaries Index closed at 3427 points and the September 2002 SPI 200 futures was priced at 3473 points.A speculator believes that share prices are likely to fall and so decides to sell September 2002 SPI 200 futures immediately.One week later,when the All Ordinaries Index rises to 3435 points and the September 2002 SPI 200 futures falls to 3471 points,the speculator decides to reverse her position.How much profit/loss does the speculator make?

• A)$200 loss.
• B)$1100 gain.
• C)$950 gain.
• D)$50 gain.

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Definitions:

Compounded Quarterly

Interest calculated four times a year on both the initial principal and the accumulated interest from previous periods.

Amortized Over

The process of paying off a debt over time through regular payments, which cover both principal and interest.

Compounded Monthly

This involves the addition of interest to the principal sum of a deposit or loan each month, affecting the total interest accrued over time.

Compounded Quarterly

Interest calculated on an investment or loan on a quarterly basis where the interest is added to the principal, resulting in interest on interest for the next quarter.