Question

You purchased a futures contract on 5,000 bushels of corn at a futures price of 331. At the time of expiration, the price was 343. What was your profit or loss? A) $6,000 profit B) $6,000 loss C) $12,000 profit D) $12,000 loss

Answer 1

You will gain profit $60,000. You're purchased one futures contract on corn (each futures contract is for 5,000 bushels) at a futures price of $440 per bushel, and at the time of expiration, the price was $452.
To calculate your profit or loss, follow these steps:
1. Determine the difference between the purchase price and the expiration
price: $452 - $440 = $12 per bushel.
2. Multiply the difference by the number of bushels in the contract: $12
× 5,000 bushels = $60,000.
3. Since the expiration price is higher than the purchase price, you have made a profit.
Your answer: You gain $60,000.