The Effect of Marking a Futures Contract to Market Is

question 96

Multiple Choice

The effect of marking a futures contract to market is similar to:

• A) requiring daily payments from the contract buyer.
• B) requiring daily payments from the contract seller.
• C) closing the current position and opening a new position daily.
• D)imposing a daily fee on both buyers and sellers.

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Definitions:

Beef

Meat derived from cattle, recognized for its nutritional value and used in various cuisines worldwide.

Equilibrium Price

The cost at which the amount of a product or service sought by consumers matches the amount available from suppliers.

Equilibrium Quantity

At the market equilibrium price, the amount of goods or services provided matches the amount that is demanded.

Substitutes

Goods or services that can replace each other in usage, such that an increase in the price of one leads to an increase in demand for the other.