Benjamin Bought a Contract for Future Delivery of 5000 Bushels

question 77

Multiple Choice

Benjamin bought a contract for future delivery of 5000 bushels of oats at $3.64 per bushel and sold a later contract at $3.92 a bushel. A month later, corn prices were rising and Joseph sold his long contract for $4.01 per bushel and covered his short by purchasing a contract for $3.99 per bushel. Ignoring trading costs, Joseph

• A) broke even.
• B) made a profit of $1,850.
• C) lost $1,500.
• D) made a profit of $1,500.

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Definitions:

Dividends

A portion of a company's earnings that is distributed to shareholders.

Voting Rights

The privileges granted to shareholders to vote on matters affecting the company they have invested in.

Cash Dividend

A payment made by a company out of its earnings to shareholders, typically in the form of cash.