An investor would like to invest in stock market

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Reference no: EM131933712

1. An investor would like to invest in stock market, but does not have sufficient funds for the next two months. Thus, the investor buys an S&P 500 futures contract with a September settlement date when the S&P 500 index is at the level of 1,700. By the settlement date, the S&P 500 index falls to 1,575. What is the investor’s profit or loss on the S&P 500 index futures in dollars?

a. 1,700; profit

b. 1,700; loss

c. 31,250; profit

d. 31,250; loss

e. none of the aboce

2. Milly Jaeger, a private investor, would like to invest in the stock market, but does not have sufficient funds for the next two months. Thus, Jaeger buys an S&P 500 futures contract with a September settlement date when the S&P 500 index is at the level of 1,750. By the settlement date, the S&P 500 index falls to 1,400. Jaeger’s nominal profit or loss on the S&P 500 index futures is $___________________.

a. 75,000; profit

b. 75,000; loss

c. 87,500; loss

d. 87,500; profit

e. none of the above

Reference no: EM131933712

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