1. Farmer's Insurance Group has decided to sell an S&P 500 index futures contract with an index price of 1850. When the position was closed out, the index price was 1790. Determine Farmer's profit or loss on this investment ignoring transaction costs.
gain of $15,000
loss of $15,000
gain of $35,000
loss of $35,000
2. Henry purchased a call option with an exercise price of $45 for a premium of $5. Before the option expired, the stock price rose to $52 and Henry exercised his option. What was the return (not annualized) to Henry?
75.0 percent
35.0 percent
50.0 percent
25.0 percent