In the ________ markets all profits and losses must be settled on a daily basis.

Question

Quizplus · Accepted Answer

In futures markets, all profits and losses must be settled on a daily basis through a process called marking to market. This ensures that both parties to the contract fulfill their obligations and the risk of default is minimized. In contrast, in forward markets, settlement occurs at the end of the contract period, while in spot markets, transaction settlement typically occurs within 2 business days. Swaps involve the exchange of cash flows based on predetermined terms and are settled periodically, rather than daily.

In the ________ Markets All Profits and Losses Must Be