Marking-To-Market Refers To

question 8

Multiple Choice

Marking-to-market refers to:

• A) adjusting a futures trading account for the day's trading gains and losses so that the futures position has a zero value after the adjustment
• B) issuing a bond with a coupon rate equivalent to the market interest rate
• C) adjusting a forward's price so that the forward contract has zero value
• D) issuing an option with a strike price that is the same as the underlying asset's market price
• E) None of these answers are correct.

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Definitions:

Money

Anything that is generally accepted in exchange for goods and services.

Capital

Assets used for the production of goods and services, including machinery, buildings, and equipment.

Economics

The social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy their unlimited wants.

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activity.