Three Days Ago, You Entered into a Futures Contract to Sell

question 51

Multiple Choice

Three days ago, you entered into a futures contract to sell €62,500 at $1.50 per €. Over the past three days the contract has settled at $1.50, $1.52, and $1.54. How much have you made or lost?

• A)Lost $0.04 per € or $2,500
• B)Made $0.04 per € or $2,500
• C)Lost $0.06 per € or $3,750
• D)None of the above

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Definitions:

CVP Analysis

Cost-Volume-Profit analysis is a method used in managerial accounting to understand how changes in costs, sales volume, and price affect a company's profit.

Material Cost

The expense incurred by a company to purchase or produce the raw materials used in manufacturing a product.

Fixed Costs

Fixed expenses unaffected by variations in production volume or sales figures, like rental fees, salary payments, and insurance costs.

Graphical Approach

A method of solving problems or representing data using diagrams, charts, or graphs.