The Effect of Marking a Futures Contract to Market Is

question 57

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:

Historical Cost

The original monetary value of an asset, reflecting the purchase or production cost without adjustments for inflation or market value changes.

Current Value

The present worth of an asset or liability, taking into account factors such as market conditions and depreciation.

Financial Statements

Records outlining a corporation's financial health, incorporating details from the balance sheet, income statement, and cash flow statement.

Assets

Resources owned or controlled by a business that are expected to produce economic benefits.