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

question 36

Multiple Choice

If you sell 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:

Period Cost

Costs that are not directly associated with the production of goods and are expensed in the period they are incurred, such as administrative and selling expenses.

Variable Cost

Charges that adjust according to the volume of goods produced or sold, specifically materials and labor costs.

Opportunity Cost

The foregone benefit that could have been achieved from options not chosen when selecting one among several alternatives.

Property Taxes

Taxes assessed on real estate by local government, based on the property's value.