Catchup Company Buys a Contract in SPI Futures,taking a Buy

question 63

Multiple Choice

Catchup Company buys a contract in SPI futures,taking a buy position on 1 April 2013 to 'take delivery' on 30 May 2013.A unit contract in SPI futures is priced at the All Ordinaries SPI multiplied by $25.On 1 April the All Ordinaries SPI is 2950.By 1 May the index has dropped to 2600 and Catchup decides to close out the contract.What is Catchup's gain or loss on the futures contract?

• A) gain of $22
• B) loss of $8750
• C) loss of $350
• D) gain of $8750

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Definitions:

Pupil Dilation

The expansion of the pupil of the eye, often in response to low light conditions or as an expression of emotion.

Withdrawal Reflex

A spinal reflex that causes immediate withdrawal from a painful or harmful stimulus.

Interneurons

Neurons that transmit impulses between other neurons, especially as part of reflex arcs in the nervous system.

Endorphins

Natural pain-relieving peptides produced by the brain that also enhance feelings of pleasure.