The effect of marking a futures contract to market is similar to:
A) doubling the total payments by the contract buyer.
B) doubling the total payments by the contract seller.
C) closing the current position and opening a new position daily.
D) imposing a daily fee on both buyers and sellers.

Question

Quizplus · Accepted Answer

Marking a futures contract to market means that the gains or losses on the contract are settled on a daily basis. This involves closing the current position and opening a new position at the current market price each day. Therefore, choice C is the correct option. Choices A and B are not correct as there is no doubling of payments, and choice D is not correct as there is no daily fee imposed on buyers or sellers.

The Effect of Marking a Futures Contract to Market Is