The Net Gain or Loss on a Futures Contract for a Stock

question 16

Multiple Choice

The net gain or loss on a futures contract for a stock index that is not closed out is based on the difference between the futures price when the initial position was created and the futures price at

• A)the settlement date.
• B)the date at which the futures price reaches its maximum.
• C)the date at which the futures price reaches its minimum.
• D)the date three months beyond the date when the initial position was taken.

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good or service and the amount that suppliers are willing to offer for sale, typically upward sloping because higher prices incentivize more production.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price during a specific time period.

Quantity Demanded

The aggregate quantity of a product or service that buyers are ready and capable of buying at a particular price point.

Surplus

An excess of what is needed or used, typically referring to goods, services, or resources exceeding what is required.