Discuss What It Means for a Futures Contract to Be

question 51

Essay

Discuss what it means for a futures contract to be marked to market. If you provide an example, assume that the hedger has purchased a 5,000 bushel wheat contract at a price of $6.90 per bushel.

---

Definitions:

Accounts Payable

Short-term debts or obligations a company owes to its suppliers or creditors for goods and services received.

Sales Returns and Allowances

Deductions from a company's sales revenue that account for returned goods and discounts or allowances given to customers.

Purchase Discounts

Reductions in the purchase price of goods, services, or assets, usually offered as an incentive for prompt payment.

Sales Returns and Allowances

A reduction in sales revenue due to returned goods or allowances made for damaged or unsatisfactory products.