Marking to Market Involves

question 2

Multiple Choice

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.

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Definitions:

Price Index

A statistical measure that shows changes in the price level of a basket of goods and services over time, used to gauge inflation.

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of unemployment and the rate of inflation in an economy.

Inflation

A continuous rise in the overall price level of goods and services within an economy over a period.

Unemployment

The condition in which a capable worker who is actively seeking employment is unable to find work.