Marking to market for a futures contract will ensure that the sum of the daily changes to the margin account will equal the difference between the original contract price and the price at the end of the contract.

Question

Quizplus · Accepted Answer

Marking to market is a process in which the value of a futures contract is adjusted daily based on the settlement price of the contract. This ensures that the margin account reflects the latest value of the contract, and any gain or loss is immediately reflected in the account balance. At the end of the contract, the sum of these daily changes in the margin account will equal the difference between the original contract price and the final settlement price of the contract. Therefore, the statement is true.

Marking to Market for a Futures Contract Will Ensure That