Marking to market is a procedure for ____ contracts.
A) futures
B) forwards
C) margin
D) implied

Question

Quizplus · Accepted Answer

Marking to market is a procedure for futures contracts, wherein the daily settlement price of the contract is adjusted based on the current market price. This helps ensure that both the buyer and the seller have the required margin to meet their obligations and prevents any default on the contract. Forwards, on the other hand, typically do not involve daily settlements and are settled at the end of the contract period. Margin refers to the funds that the buyer or seller must deposit as a guarantee while entering into a futures or options contract. Implied refers to the value inferred from other market factors, such as option prices or interest rates.

Marking to Market Is a Procedure for ____ Contracts