Gains and losses on futures contracts are realized:
A) Only on the settlement day.
B) If the contract is exercised, otherwise, they are never realized.
C) Only if the buyer finds it profitability to exercise the contract.
D) On a daily basis through a process known as marking-to-market.
E) Only at the time the contracts mature.

Question

Quizplus · Accepted Answer

Gains and losses on futures contracts are realized on a daily basis through a process known as marking-to-market. This process adjusts the contract's value daily to reflect market changes, ensuring that gains and losses are recognized and accounted for in real-time.

Gains and Losses on Futures Contracts Are Realized