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. This involves adjusting margin accounts both for the buyers and sellers of futures contracts. The purpose of this process is to ensure that both parties have enough funds to cover potential losses and maintain a balance in the market. The clearing corporation typically performs this process daily or multiple times a day to reflect changes in market values.

The Process of Marking to Market