The process of marking to market:
A) is done by the clearing corporation to reduce risk in futures contracts.
B) involves the margin accounts of only the buyers of future contracts.
C) involves the margin accounts of only the sellers of future contracts.
D) usually requires margin accounts to be adjusted weekly by the clearing corporation.

Question

Quizplus · Accepted Answer

The process of marking to market is done by the clearing corporation to reduce risk in futures contracts. It involves adjusting the margin accounts of both buyers and sellers of future contracts based on the current market value of the underlying asset. This is done on a daily basis to ensure that the margin accounts of both parties reflect the market conditions, and to prevent the accumulation of large losses that can arise if the market moves against a position.

The Process of Marking to Market