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