Marking to market involves
A) changing the futures price to the spot price each day.
B) engaging in arbitrage so as to reduce the risk involved with futures contracts.
C) crediting or debiting the margin account based on the net change in the value of the futures contract.
D) updating the futures price after the market closes each day.

Question

Quizplus · Accepted Answer

Marking to market involves adjusting the margin account based on the net change in the value of the futures contract, which is done by crediting or debiting the account. This is done on a daily basis to reflect the current market value of the contract. Choices A, B, and D are incorrect as they do not accurately describe the process of marking to market.

Marking to Market Involves