Question

You bought one soybean future contract at $5.13 per bushel. What would be your profit (loss) at maturity if the wheat spot price at that time were $5.26 per bushel? Assume the contract size is 5,000 bushels and there are no transactions costs.

Answer 1

Your profit at maturity is:

= $650.

Step-by-step explanation:

a) Data and Calculations:

Cost of purchase of soybean future contract = $5.13 per bushel

Contract size bought = 5,000 bushels

Maturity spot price = $5.26 per bushel

Profit = Selling Price Minus Purchase cost

= ($5.26 - $5.13) * 5,000

= $0.13 * 5,000

= $650

b) You will be making a profit of $650 ($0.13 * 5,000) from the sale since it was bought at $5.13 per bushel and sold at $5.26 per bushel. Therefore, a profit of $0.13 ($5.26 - $5.13) per bushel was generated.