The Process of Marking a Futures Contract to Market Means

question 41

Multiple Choice

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.

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Definitions:

Insolvent

Insolvent refers to the inability of an individual or organization to meet its financial obligations as they become due, due to a lack of sufficient assets.

Reserve Requirements

Regulations set by the central bank determining the minimum amount of reserves each bank must hold against deposits.

Fed

The Federal Reserve System, which is the central banking system of the United States responsible for monetary policy.

Interest Rate

The interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.