If You Buy a Futures Contract on the S&P 500

question 51

Multiple Choice

If you buy a futures contract on the S&P 500 Index at a price of 450 and the index rises to 500,you will ________.

• A) lose $12,500
• B) gain $12,500
• C) lose $50
• D) gain $50

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Definitions:

Borrowing

The act of obtaining funds from another party with the promise to repay the principal amount along with interest or other charges.

Actual Inflation Rate

The percentage increase in the general price level of goods and services in an economy over a period of time, as measured by the consumer price index or other methods.

Real Rate

The real rate is the interest rate adjusted for inflation, providing a more accurate measure of the true return on an investment or the true cost of borrowing.

Interest

The cost of borrowing money or the return on investment, typically expressed as a percentage of the principal.