The process of marking a futures contract to market means that:
A) the profitability of the contract is locked in from the onset of the contract.
B) the amount of commodity to be delivered changes as prices change.
C) contracts are closed out as soon as they become unprofitable.
D)profits or losses are posted to the contract daily.

Question

Quizplus · Accepted Answer

Marking a futures contract to market means that the profits or losses are posted to the contract daily. The price of the contract is adjusted based on the current market price, and if a loss is incurred, the trader must add money to their margin account to cover it. This process helps ensure that both parties fulfill their contract obligations and reduces the risk of default. Options A, B, and C are not accurate descriptions of marking a futures contract to market.

The Process of Marking a Futures Contract to Market Means