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In a futures contract, marking-to-market means that:
ASettlement happens only at contract maturity
BThe contract may be exercised at any time
CPremium is paid upfront to enter the position (within the standard regulatory framework)
DDaily gains and losses are credited / debited to margin accounts
Answer & Solution
Correct answer: D. Daily gains and losses are credited / debited to margin accounts
1. Identify what the question asks: this concept maps to markingtomarket (§5.2.3).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (D).
_Source: ICAI BoS CA Final Paper 2, Ch 9 "Derivatives Analysis and Valuation"_
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