Marking to market is a process that:
A)Involves a transfer of risk.
B)Ensures that the buyers and sellers receive what the contract promises.
C)Always requires the sellers of contracts to transfer funds to the buyers of contracts.
D)Buyers and sellers can request for an additional fee when the contract is created.

Question

Quizplus · Accepted Answer

Marking to market refers to the process of adjusting the value of a financial instrument to reflect the current market value. This ensures that buyers and sellers receive what the contract promises and eliminates the risk of default by either party. It does not always require transfer of funds, nor is it an option that buyers and sellers can request for an additional fee. Instead, the adjustment of the contract value occurs automatically based on changes in the market value.

Marking to Market Is a Process That